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?
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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