Question

You want to have $22,500 saved 4 years from today in order to make a down payment on a house. To fund this, you will make deposits each week from your paycheck into an account that will earn 4.63 percent compounded weekly. How much must you deposit each week?

Answer 1

Future value(FV) = $22,500

Weekly interest(r) = 4.63%

Time = 4 years = 52 weeks * 4 = 208 weeks.

As there are 365 days in a year, there will be 5 additional days accumulated in 4 years' time.

Hence Time(t) = 208 + 5/7 = 208.71 weeks

We can calculate the weekly installments by using a financial calculator or by using excel,

Time	208.71
FV	$22,500
Interest rate	4.63%
Pmt	$0.082274

Hence in order to save 22500 in 4 years' time, we have to deposit 0.0822(approx) every week.

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