is there something wrong with my answer? could someone please let me know if im on the right path
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!