SOLUTION: 6. Cathy saves $25 at the end of each week and deposits the money in an account paying 5% compounded monthly. How much will she accumulate in 5 years?

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: 6. Cathy saves $25 at the end of each week and deposits the money in an account paying 5% compounded monthly. How much will she accumulate in 5 years?      Log On

Ad: Over 600 Algebra Word Problems at edhelper.com


    

Question 1141909: 6. Cathy saves $25 at the end of each week and deposits the money in an account paying 5% compounded monthly. How much will she accumulate in 5 years?
Answer by greenestamps(13195) About Me  (Show Source):
You can put this solution on YOUR website!


The standard formulas for future value in problems like this are only valid if the frequency of contributions is the same as the frequency of compounding.

You could convert the $25 per week savings into a monthly amount; but then you run into problems with different months having different numbers of weeks.

If you really need to work this exact problem, use a spreadsheet, with contributions monthly to match the frequency of compounding, noting that $25 a week means a contribution of $100 in some months and $125 in other months.