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frctl

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A person wishes to have $15,000 cash for a new car 5 years from now. How much should be placed in an account now, if the account pays 6.75% compounded weekly? Compute the answer to the nearest dollar.
 
You must be aware of the posting guidelines by now.
 
What information does this formula give you. You should not randomly guess which formula to use.

What does A mean? P? r? n? t?
 
P is the principal amount
r is the annual rate
n is the compounded times
t is the amount of years

Perhaps

15000 = P(1 + 6.75/52)(52)(5)
 
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frctl said:
P is the principal amount
r is the annual rate
n is the compounded times
t is the amount of years

Perhaps

15000 = P(1 + 6.75/52)(52)(5)
Click to expand...
You left out the most important variable. What does A give you??????
 
Can you solve A = P(1 + r/n)nt for P??

After doing that, plug in the values for A, r, n and t
 
frctl said:
S = R/T

Yes although what is S and T
Click to expand...
You need to notice that A = P*(1 + r/n)nt
R is like the A in your equation, S is like the P in your equation and T is like (1 + r/n)nt in your equation. Do you see that??
 
Yes, I see this. How does it help me compute the answer to the question.

S = A/(1 + r/n)nt
 
It may help to realize that r/n = rate per compounding period, r is an annual rate of interest, n is the number of compounding periods per year, and t is the number of years.

Formulas are meaningless unless you know what the variables stand for.. Here n is the number of compounding periods per year. Each compounding period is 1 week. Sadly, the number of weeks per year is not a nice number, but for many practical purpose 365/7 = just about 52. So unless you are dealing with millions, you can say 365/7 = 52. And what is t measuring? Thus , nt equals what? How about (1 + r/n)?

If you know [MATH]\dfrac{r}{n} \text { and } nt, \text { then what is } g = \left ( 1 + \dfrac{r}{n} \right )^{nt}[/MATH]
But F = P * g, where F is future value, and P is present value.. Thus P = F/g.
 
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frctl said:
Yes, I see this. How does it help me compute the answer to the question.

S = A/(1 + r/n)nt
Click to expand...
1st S should be P but that was just a typo. If you calculate the right hand side, A/(1 + r/n)nt, by plugging in the values for A, r, n and t you will have P. Isn't it P that you are in search of?
 
P = 15000/(1 + 6.75/52)50(5)
P = $5.25

no this is not the answer
 
Last edited:
frctl said:
P = 15000/(1 + 6.75/52)50(5)
P = $5.25

hm no this is not the answer
Click to expand...
r is NOT 6.75
There are not 50 weeks in a year.
Are you really comfortable thing that you can put $5.25 in an account and in 5 years having $1500??
 
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