Question

If you put $1000 in a savings account that yields an 7% annual rate of interest that is compounded weekly, how much would that be worth in 25 weeks

Answer 1

Answer:

A = $1034

Step-by-step explanation:

The relevant Amount function is A = P(1 + r/n)^(n*t), where r is the annual interest rate as a decimal fraction, n is the number of compounding periods per year, and t is the number of years.

There are 52 weeks in a year.  Hence, n = 52, and 25 weeks = 25/52 year, or 0.481 year.  

The accumulation (value of the savings) would be

A = ($1000)(1 + 0.07/52)^(52*[25/52]), or approximately

A = ($1000)(1.0013)^25, or approximately A = $1034