SOLUTION: Mr M wants to start saving early for his son's tertiary studies one day. He wants pay 350 weekly into a savings account that returns 8,5% interest per year compounded weekly. How

Algebra ->  Finance -> SOLUTION: Mr M wants to start saving early for his son's tertiary studies one day. He wants pay 350 weekly into a savings account that returns 8,5% interest per year compounded weekly. How       Log On


   

Question 1093732: Mr M wants to start saving early for his son's tertiary studies one day. He wants pay 350 weekly into a savings account that returns 8,5% interest per year compounded weekly. How many years will it take him to have a 400 000 in the account. I got 6.75 please confirm my answer because the options l am given don't match what l am given.
[1] 12.4 years
[2] 26.1 years
[3] 21.98 years
[4] 53.8 years
Answer by greenestamps(13200) About Me  (Show Source):
You can put this solution on YOUR website!

One of the given answer choices is correct. I have no idea how you got your answer.

The value A of an investment like this, with a periodic contribution of P, a periodic interest rate of i, for n periods, is given by the formula

A+=+%28P%28%281%2Bi%29%5En-1%29%29%2Fi

The value A you want is 400000; the periodic contribution P is 350; the periodic interest rate i, since interest is compounded weekly (52 times a year) is .085/52.

Since the unknown, the number of periods n, is an exponent, solving the problem will involve logarithms. And remember that the value of n you get will be the number of weeks; you will need to convert that to years to see which answer choice is correct.