Taylor is 19 years old and in CEGEP which she has two years left, then 4 years in university. Her grandfather was born in Sicily, and he wants Taylor to backpack throughout Italy once she finishes all her studies in 6 years. He gave her $12,000 for her to invest in her Tax-Free Savings Account (TFSA) which pays 7%, compounded bi-weekly. How much will Taylor have to travel with after 6 years?

Question

Taylor is 19 years old and in CEGEP which she has two years left, then 4 years in university. Her grandfather was born in Sicily, and he wants Taylor to backpack throughout Italy once she finishes all her studies in 6 years. He gave her $12,000 for her to invest in her Tax-Free Savings Account (TFSA) which pays 7%, compounded bi-weekly. How much will Taylor have to travel with after 6 years?

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1 answer
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Answer 1

Bot GPT 3.5 answered

First, we need to calculate the future value of Taylor's investment in her TFSA after 6 years.

The formula for compound interest is:
A = P(1 + r/n)^(nt)

Where:
A = the future value of the investment
P = the principal amount (initial investment), which is $12,000
r = the annual interest rate (in decimal form), which is 7%
n = the number of times the interest is compounded per year, which is 26 (bi-weekly)
t = the number of years the money is invested for, which is 6 years

Plugging in the values:
A = $12,000(1 + 0.07/26)^(26 * 6)

A = $12,000(1 + 0.00269230769)^(156)

A = $12,000(1.00269230769)^(156)

A = $12,000(1.57116129196)

A = $18,854.07

Therefore, after 6 years, Taylor will have $18,854.07 in her TFSA to travel with.