Question

An account is opened with an initial deposit of $8,500 and earns 3.3% interest compounded semi-annually for 30 years. How much more would the account have been worth if the interest were compounding weekly?

Answer 1

To have $10,000 in ten years with 10% interest compounded annually, you need to put approximately $3,853.98 into the bank account.

Step-by-step explanation:

To calculate the amount of money you need to put into a bank account to have $10,000 in ten years with 10% interest compounded annually, you can use the formula for compound interest:

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

Where:

• A is the final amount
• P is the principal (initial deposit)
• r is the interest rate (in decimal form)
• n is the number of times interest is compounded per year
• t is the number of years

Plugging in the given values, we have:

A = P(1 + 0.10/1)^(1*10)

A = P(1.10)^10

Now, we can rearrange the formula to solve for P:

P = A / (1.10)^10

Substituting A = $10,000:

P = $10,000 / (1.10)^10

P ≈ $3,853.98