How do you find the value of your investment after five year's growth if you invest $2000 in a bank offering 10% interest compounded weekly?

1 Answer
Mar 29, 2015

I would use the compound interest formula:

#A=P(1+r/n)^(nt)#

Where #A# equals accumulated amount (often called #F# for future value) It is final value

#P# equals the principal (often called present value) It is the initial value.

#r# = the nominal (stated) annual interest rate

#n# is the number of periods per year
#t# is the time asked about in years

and #nt# is the number of periods in the time asked about.

Find the value of your investment after five year's growth if you invest $2000 in a bank offering 10% interest compounded weekly

Find #a#, given
#P = $2000#,
#r=10% = 0.10#
#n=52#
#t=5#

So #nt=260#

And, #A=2000(1+0.10/52)^260#

Use tables or electronics (or a slide rule if you have one and can use it) to evaluate this expression.

Note
Sometimes, instead of time in years, we just give the number of periods. For example:
Find the value of your investment after 100 months growth if you invest $5000 in a bank offering 10% interest compounded monthly

Here #P=5000#, #r=0.10#, , #n=12# and #nt=100#

#A=5000(1+0.10/12)^100#