in description

Question

Ashley wants to open up a cupcake shop when she graduates from culinary school in 4 years.

She deposits the same amount into a savings account at the end of each week. The annual

interest rate is 2.6% and interest is compounded weekly.

(a) What regular deposit should Ashley make at the end of each week in order to

have $10,000 for the setup costs in 4 years?

(b) What is the total amount of interest that Ashley earns?

Answer 1

FV = b(1 + r/n)^nt + d[(1 + r/n)^nt - 1] / (r/n)

FV is future value, b is beginning balance, d is weekly deposit, r is rate, n is number of periods, t is years

 

10000 = 0 + d[(1 + 0.026/52)^(52)(4) - 1] / (0.026/52)

10000 = d[1 + 0.0005)²⁰⁸ - 1] / 0.0005

5 ≈ d[1.10957 - 1]

5 ≈ 0.10957d

45.63 ≈ d