Question

For an interest rate of 5% compounded bi-weekly, find the amount of money that will be on the account if $70 is deposited at the end of each period for the first year and $80 thereafter, at the end of each period, for another three years.

Answer 1

Answer:

Year 1:

Bi-weekly deposit at the end of each period = $70

Bi-weekly interest rate= 5% / 26

Number of bi-weekly periods = 26

Value at the end Year 1 = FV (rate, nper, pmt, pv, type) = FV (5%/26, 26, -70, 0, 0) = $1864.43

Year 2 , 3 and 4:

PV = $1864.43

Bi-weekly deposit at the end of each period = $80

Bi-weekly interest = 5% / 26

Number of bi-weekly periods = 3* 26 = 78

Value at the end Year 4 = FV (rate, nper, pmt, pv, type) = FV (5%/26, 78, -80, -1864.43, 0) = $8,891.19

Amount of money that will be on the account = $8,891.19