Question

A company needs $5,400,000 in 14 years in order to expand their factory. How much should the company invest each week if the investment earns a rate of 7.9% compounded weekly?

Answer 1

Answer: the company should invest $12191 each week

Step-by-step explanation:

The amount that the company needs is $5,400,000

We would apply the periodic interest rate formula which is expressed as

P = a/[{(1+r)^n]-1}/{r(1+r)^n}]

Where

P represents the weekly payments.

a represents the amount that the company needs

r represents the rate.

n represents number of weekly payments. Therefore

a = 5,400000

There are 52 weeks in a year

r = 0.079/52 = 0.0015

n = 52 × 14 = 728

Therefore,

P = 5400000/[{(1+0.0015)^728]-1}/{0.0015(1+0.0015)^728}]

5400000/[{(1.0015)^728]-1}/{0.0015(1.0015)^728}]

P = 5400000/{2.98 -1}/[0.0015(2.98)]

P = 5400000/(1.98/0.00447)

P = 5400000/442.95

P = $12191