Calculate the future value (in dollars) of $1,550 deposited into an account earning an annual simple interest rate of 4% compounded daily after 3 years. Round to the nearest cent. (Use 365 for the number of days in a year. Enter a number.)

Question

Mathematics

Eloise

25 November, 10:04

Calculate the future value (in dollars) of $1,550 deposited into an account earning an annual simple interest rate of 4% compounded daily after 3 years. Round to the nearest cent. (Use 365 for the number of days in a year. Enter a number.)

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Answers (1)

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Chance Petty · Answer 1

Answer: the future value is $1748.4

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P (1+r/n) ^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = 1550

r = 4% = 4/100 = 0.04

n = 365 because it was compounded 365 times in a year.

t = 3 years

Therefore,.

A = 1550 (1 + 0.04/365) ^365 * 3

A = 1550 (1+0.00011) ^1095

A = 1550 (1.00011) ^1095

A = 1550 * 1.128

A = 1748.4