Question

How do you find the value of your investment after five year's growth if you invest $2000 in a bank offering 10% interest compounded weekly?

Answer 1

I would use the compound interest formula:

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

Where `A` equals accumulated amount (often called `F` for future value) It is final value

`P` equals the principal (often called present value) It is the initial value.

`r` = the nominal (stated) annual interest rate

`n` is the number of periods per year
`t` is the time asked about in years

and `nt` is the number of periods in the time asked about.

Find the value of your investment after five year's growth if you invest $2000 in a bank offering 10% interest compounded weekly

Find `a`, given
`P = $2000`,
`r=10% = 0.10`
`n=52`
`t=5`

So `nt=260`

And, `A=2000(1+0.10/52)^260`

Use tables or electronics (or a slide rule if you have one and can use it) to evaluate this expression.

Note
Sometimes, instead of time in years, we just give the number of periods. For example:
Find the value of your investment after 100 months growth if you invest $5000 in a bank offering 10% interest compounded monthly

Here `P=5000`, `r=0.10`, , `n=12` and `nt=100`

`A=5000(1+0.10/12)^100`