Hello, Aa,
The formula for the money earned after a period of time and interest is:
A = P(1+r/n)^nt, where
A = final amount
P Initial amount
r = interest rate (decimal)
n = the number of times the interest is credited per time period, and
t = the number of time periods elapsed.
Using the values given:
A = $27,500
P is the unknown in this case. It is the amount we need to invest at time zero
r = 0.041 yearly rate
n = 52 (the number of weeks in a year), and
t = the number of years
The interest is compounded weekly, so n = 52.
If you believe all this, then enter the data:
27,500 = P * (1+(0.041/52))^52*7
27,500 = P(1 +0. 000788)^364
27,500 = P*(1.000788)^364
27,500 = P*(1.332)
P = 27,500/1.332
P = $20,641.41
I hope this helps,
Bob
