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# P5-8: Time value: Misty needs to have \$15,000 at the end of 5 years to fulfill her goal of purchasing a small sailboat.

1. P5-8: Time value:

Misty needs to have \$15,000 at the end of 5 years to fulfill her goal of purchasing a small sailboat. She is willing to invest a lump sum today and leave the money untouched for 5 years until it grows to \$15,000, but she wonders what sort of investment return she will need to earn to reach her goal. Use your calculator or spreadsheet to figure out the approximate annually compounded rate of return needed in each of these cases:

a. Misty can invest \$10,200 today.
b. Misty can invest \$8,150 today.
c. Misty can invest \$7,150 today.

SOLUTION:
Future Value
Nper
PMT
a. \$15,000.00
5.00
\$0.00 Present Value \$10,200.00 Using excel formula,
Rate
b. Present Value 8.02%
\$8,150.00 Using excel formula,
Rate
c. Present Value 12.98%...

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