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Math Help - Exponential Function and Compounded Decomposition problem

  1. #1
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    Sauaga
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    Exponential Function and Compounded Decomposition problem

    Hi, I need some help with the following problem. Please let me know if I'm on the right track:

    A student knows that she will need $3,500.00 five years from now. She must decide between Bank A, which offers 7% compounded weeekly, and Bank B which offers 6% compounded continuosly. Which Bank should she use?

    Bank A variables:

    Future value = 3,500
    Annual rate = 0.07
    m = 52.177 weeks in 1 year
    t = 5 years

    Is this correct so far? So we know everything except for present value P.

    3500 = P(1+0.07/52.177)^(52.177*5)
    Present value = $2466.99 is this correct?

    Bank B:

    Future value = 3500
    Annual rate = 0.06
    t = 5 years

    Once again we have to solve for Present value using the Exponential function e correct?

    A = Pe^rt

    3500=Pe^0.3
    3500=P(1.349859)

    Present value = $2592.86 is this correct?

    And the answer would be Bank A... Please let me know if i made any sense thank you!
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  2. #2
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    Sauaga
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    is there something wrong with my answer? could someone please let me know if im on the right path
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