Question

Bree would like to purchase a snowboard, boots, and bindings for $476.95. She has $300 left in her savings account, and can afford to save $20 per week in a GIC, which earns 4.8% compounded weekly. Her savings account earns 0.6% compounded monthly. What do you suggest she do? How long will it take for her to earn enough to purchase the snowboard?

Answer 1

A) Calculation of future value from her savings account

Present value = $300, Monthly savings (PMT) = 0, Interest = 0.6% compunded monthly,

In two months this savings will grow to $300.30

B) Calculation of future value from her weekly saving in GIC

Present value = 0, Weekly savings (PMT) = $20, Interest = 4.8% compunded weekly,

In nine weeks this savings will grow to $180.67

C) Total savings from above two investments will be $480.97 in two months and one week

Have attached image for Calculations.