Question

I put $50 from every paycheck (every two weeks) into my savings account, which earns 0.8% annual interest compounded every two weeks. If I continue this for the next 5 years, how much will I have?

Answer 1

He will have $6,765.228 in his savings account

Step-by-step explanation:

Step 1: Determine the number of weeks in a year

1 year=52 weeks

5 years=52×5=260 weeks

Step 2: Determine total earnings in 5 years

Total earnings=earnings per 2 weeks×total number of weeks/2

where;

Total earnings=unknown

earnings every 2 weeks=$50

total number of weeks=260

replacing;

Total earnings=50×260/2=$6,500

Step 3: Determine total earnings in 5 years when compounded with interest

Using the formula;

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

where;

A=Final amount

P=initial amount

r=annual interest rate

n=number of times the rate is compounded annually

t=number of years

In our case;

A=unknown

P=$6,500

r=0.8%=0.8/100=0.008

n=52/2=26

t=5 years

replacing;

A=6,500(1+0.008/26)^(26×5)

A=6,500(1+0.000308)^130

A=6,765.228

He will have $6,765.228 in his savings account