Question

If you'd like to accumulate $50,000 in 9 years by investing in an account earning 4% compounded weekly, how much would you need to deposit today? Round to the nearest cent.

Answer 1

future value = F.V. = $50,000

time = t = 9 years

interest = 4% p.a. compounded weekly

since interest is compounded weekly , so we have n = 52 which is the no. of times the interest is compounded in a year

& P = ?

so we have F.V. = P*(1+i/n)^nt

50,000 = P(1 + .04/52)^9*52 = P(1.0008)^468 = P*1.433131

this implies P = 50000/1.433131 = 34888.64 or 34889 (rounded off)

so , $34889 must be deposited today to get $50000 after 9 years at 4% p.a compounded weekly

hope this helps!!