Question

If $34,500 is invested at 6.9% for 30 years, find the future value if the interest is compounded:

A-annually
E- daily

Answer 1

A) 255,358.46

E) 273,353.92

Explanation:

The formula for future value of principal P at interest rate r per year compounded n times per year for t years is ...

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

Filling in the numbers and doing the arithmetic, we have ...

A) FV = $34,500(1 + 0.069)^30 ≈ $255,358.46

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E) FV = $34,500(1 + 0.069/365)^(365·30) ≈ $273,352.92