Suppose an investor deposits \$16,000 into an account for which interest is compounded weekly. Find the amount of money in the account after 6 years using the following interest rate. If r=3.5%, then the investment is worth what after 6 years?

Solution

S u pp ose an in v es t or d e p os i t s $16, 000 in t o an a cco u n t f or w hi c h in t eres t i s co m p o u n d e d w ee k l y . F in d t h e am o u n t o f m o n ey in t h e a cco u n t a f t er 6 ye a rs u s in g t h e f o ll o w in g in t eres t r a t e . I f r = 3.5%, t h e n t h e in v es t m e n t i s w or t h w ha t a f t er 6 ye a rs ?

Amount : 19737.45

Solution steps

Translate the problem into an equation:

A = 16000 (1 + \frac{0.035}{52})^{52 \cdot 6}

16000 (1 + \frac{0.035}{52})^{52 \cdot 6} = 19737.45462 \dots

Round to the nearest hundredth:

19737.45

Amount : 19737.45