Question

Bill wants to invest $45,000 for the next 5 years. If the investment is going to generate 8% interest compounded weekly, how much will he have at the end of 5 years?

Answer 1

ANSWER

• The Question belongs to the concept of "Time Value of Money" .
• The Equation used to Calculate Future Value of Amount Invested is :

Future Value at nth period = Present Value * (1+r/m)t*m

where,

r = Rate of Interest Annually

m = Number of Times Compounding done in a year

t = time period in years

NOW , SOLVING OUR QUESTION USING ABOVE EQUATION ASSUMING 52 WEEKS IN A YEAR :

Future Value at 5^th year = 45000 * (1 + 0.08_/52)^{5 * 52}

= 45000 * (1.00153846153)²⁶⁰

= 45000 * (1.491955555)

= $ 67138 approx {(1.001538)²⁶⁰ will be solved using financial calculator}

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