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29 June, 22:52

If Julie invests $9,250 at a rate of 7%, compounded weekly, find the value of the investment after 5 years.

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  1. 29 June, 23:13
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    First, we determine the effective interest rate of the given compound interest.

    ieff = (1 + r/n) ^n - 1

    where r is the given original rate and n is the number of compounding. In a year, there are approximately 52 weeks.

    ieff = (1 + 0.07/52) ^52 - 1

    ieff = 0.07246 = 7.246%

    Then, we calculate for the future worth of money after five years using the effective interest annually.

    F = P (1 + r) ^n

    Substituting,

    F = ($9250) * (1 + 0.07246) ^5

    = $13,123.29

    Thus, the value of the investment after 5 years is approximately equal to $13,123.29.
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