Question

A principal of $40,000 will be invested in an account. Bank A has a 5.5% annual interest rate compounded daily. Find the amount in the account after 20 years. Show the equation used for each calculation.

Answer 1

$116800

Explanation:

Step one:

given

principal= $40,000

rate= 5.5%

time = 20 years

Step two:

the final amount is expressed as

`A= P(1+r)^t`

substitute

`A= 40000(1+0.055)^2^0\\\\A= 40000(1.055)^2^0\\\\A= 40000*2.92\\\\A=116800\\\\`

$116800