Christopher has just turned 13 and decided to save for his mission. He has a part time job and can save $30 a week. He found a savings account with an APR of 0.8%. He wants to know how much he will have when he turns 18.Christopher knows the following two commands in Microsoft Excel:PMT(rate, nper, PV, FV)FV(rate, nper, pmt, PV)If Christopher assumes there are 4 weeks in a month, which of the following commands should Christopher use to find out his account balance when he turns 18?Group of answer choices=FV(0.008,13*12,30,0)=FV(0.008/12,5*12,30*4,0)=FV(0.8/12,5*12,0,30)=FV(0.008/12,13,0,30*4)=FV(0.8/12,18*12,30*4,0)
Question
Christopher has just turned 13 and decided to save for his mission. He has a part time job and can save $30 a week. He found a savings account with an APR of 0.8%. He wants to know how much he will have when he turns 18.Christopher knows the following two commands in Microsoft Excel:PMT(rate, nper, PV, FV)FV(rate, nper, pmt, PV)If Christopher assumes there are 4 weeks in a month, which of the following commands should Christopher use to find out his account balance when he turns 18?Group of answer choices=FV(0.008,1312,30,0)=FV(0.008/12,512,304,0)=FV(0.8/12,512,0,30)=FV(0.008/12,13,0,304)=FV(0.8/12,1812,30*4,0)
Solution
The correct command that Christopher should use to find out his account balance when he turns 18 is:
=FV(0.008/12,512,304,0)
Here's why:
- The rate is 0.008/12 because the APR is 0.8% (or 0.008 as a decimal), and this is divided by 12 to get the monthly interest rate.
- The nper (number of periods) is 5*12 because Christopher wants to save for 5 years (from age 13 to 18), and there are 12 months in a year.
- The pmt (payment) is 30*4 because Christopher is saving $30 a week, and there are roughly 4 weeks in a month.
- The PV (present value) is 0 because Christopher is starting with no savings.
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