Find the future of an annuity with weekly deposits of 12$, made over a period of 5 years, with 3.8%interst compounded weekly?
2007-01-30 01:30:46 · 2 answers · asked by Eugene D 1 in Science & Mathematics ➔ Mathematics
FV = PMT[((1 + i)ⁿ - 1) / i]
Where:
FV = Future Value of an Ordinary Annuity
PMT = Amount of each payment = $12
i = Interest Rate Per Period = 0.038
n = Number of Periods = 5 years × (52 weeks/year) = 260 weeks
Realizing that nowhere EVER will you find a bank that will pay 3.8% interest compounded WEEKLY...
FV = $12[((1 + 0.038)^260 - 1)/ 0.038]
FV = $12[((16,267.17 - 1)/ 0.038]
FV = $12[428,057] = $5,136,684.17
So for a total payment of $12 × 260 = $3,120, you'd make over $5 million.
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If, on the other hand, you meant that the 3.8% interest is annual interest, compounded weekly, then the REAL interest rate is 3.8%/52 = 0.073%
If I use that in the calculation:
FV = $12[((1 + 0.00073)^260 - 1)/ 0.00073]
FV = $3,434.72
That's MUCH more realistic.
2007-01-31 05:07:58 · answer #1 · answered by Jim Burnell 6 · 0⤊ 0⤋
12*[(1+3.8%)^(5*54)]
or
12*[(1+3.8%*54)^5]
2007-01-30 01:44:42 · answer #2 · answered by Rachel 1 · 0⤊ 0⤋