Question
A bank features a savings account that has an annual percentage rate of r 4% with interest compounded weekly. Andrew deposits $8,500 into the account. The account balance can be modeled by the exponential formula r nt S(t)=P(1+n) ,where S is the future value, P is the present value, r is the annual percentage rate, n is the number of times each year that the inerert is compounded, and t is the tirme in years (A) What values should be used for P, r, and n? n= (B) How much money will Andrew have in the account in 7 years? Answer = $ Round answer to the nearest penny
Explanation / Answer
Solution:
1.
use;
P = $8500
r = 0.04
n= 12*30/7 = 52 (Approx)
t = 7 years
Hence;
After 7 years he has:
8500(1+0.04/52)^52*7
=> $11245.39
2.
use;
P= $5000
r = 0.045
n= 2
Hence;
renee have this much in 7 years =5000(1+0.045/2)^2*7
=> $6527.417