Question

A grandmother needs $50,000 for her here grandsons university in 10 years. She plans to make equal bi-weekly payments to a savings account for the first 6 years at an interest rate of 3.9% compounded bi-weekly. She will then leave that sum to accumulate interest over the next 4 years. How much should her bi-weekly payments be?

Answer 1

Recalling your formula for future value of an annuity, and compound interest, you want P such that

r = .039/26
P((1+r)^(26*6)-1)/r)*(1+r)^(26*4) = 50000

Now just solve for P