Jay Wants to Save an Amount of Money to Buy

question 114

Essay

Jay wants to save an amount of money to buy a new canoe two years from now. He estimates that the price of the canoe will be $2000, and he wants to save the money in two tranches at the beginning of each of the next two years. For simplicity, suppose interest is computed only at the end of the year and Jay wants to save equal amounts every year. If the interest rate is 10% per year, how much does Jay need to save every year?

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Definitions:

Common Cold

A viral infectious disease of the upper respiratory tract characterized by symptoms such as sneezing, sore throat, and runny nose.

Influenza

A highly contagious viral infection that attacks the respiratory system, commonly known as the flu.

Allergy

An immune system reaction to a foreign substance, such as pollen, food, or pet dander, that doesn't cause a response in most people.

Moderate Cough

A cough that is not severe but persists, possibly indicating a mild or developing health issue.