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Fv=10 000 What do I do to find weekly payment general annuity

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  1. Mar 16, 2005 #1
    Mary would like to save $10 000 at the end of 5 years for a future down payment on a car. How much should she deposit at the end of each week in a savings account that pays 12%/a compounded monthly, to meet her goal?

    This is a general ordinary annuity
    therefore before I make the line diagram and write out the series and find out the weekly payment Im thinking that I will probably have to find the nominal interest rate first Is this correct? How do I do this question? PLz help me
     
  2. jcsd
  3. Mar 16, 2005 #2
    Is 11.95%/a compounded weekly equivalent to 12%/a compounded monthly? SOMEONE PLZ HELP ME!
     
  4. Mar 16, 2005 #3

    Pengwuino

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    Gold Member

    God no, 11.95% compounded weekly is like 50% compounded monthly.
     
  5. Mar 16, 2005 #4
    ok well what do i do when i find fv i get $28.15 with the formula and $28.24 on the graphing calculator

    I have to find the nominal interest rate dont I?
     
  6. Mar 17, 2005 #5

    shmoe

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    Science Advisor
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    Pretty close. It's a good idea to avoid rounding until absolutely necessary though. (Pengwuino, these are quoted as nominal rates)

    Uhh, how did the graphing calculator calculate that? Is it some kind of rounding problem? I'm not sure why your answers are different.
     
  7. Mar 17, 2005 #6
    I dont know I think the graphing calculator is correct here are the values I input into the tvm solver

    N=260.00
    I%=12
    PV=0.00
    PMT=0.00
    FV=10 000
    P/Y=52
    C/Y=4.00
    PMT: END BEGIN

    I tried so hard not to round when I was using the formula but my decimal gets smaller not bigger no matter what.

    Is the new interest rate I calculated correct? Thats the one i pluged into the future value formula not the 12%
     
  8. Mar 17, 2005 #7
    I think I just saw my mistake C/Y should be 12 not 4 when I change this value I get $28.15 which is what I get when I use the formula this value should be correct right?
     
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