Answer:
It must be invest $540.21 in an account that returns 3.5% comp. weekly in order to obtain $600 in 3 years (156 weeks).
Explanation:
Hi, first we need to determine the effective weekly rate that we need to use in order to find the present value that is required by the problem. The way to do it is:
[tex]r(e.weekly)=\frac{0.035}{52} =0.000673[/tex]
Now, the formula that we need to use in order to find the present value is:
[tex]PV=\frac{FV}{(1+r)^t}[/tex]
Where:
PV= Present value
FV=Future value (in our case, $600)
r= Discount rate (in our case, 0.000673)
t= Years of investment (in our case, 3yrs*52=156)
Everything should look like this:
[tex]PV=\frac{600}{(1+0.000673)^{156} }=540.21[/tex]
So, you have to invest $540.21 at 3.5% compounded weekly for 3 years in order to obtain $600.
Best of luck
