Question

Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year. How much would be in the account after 8 months, assuming each month has 30 days?

Question 47 options:

$5,178.09


$5,436.99


$5,708.84


$5,994.28


$6,294.00

Answer 1

$5,178.09

Step-by-step explanation:

Data provided in the question:

Principle amount, P = $5,000

Interest rate, r = 5.25%

Duration, t = 8 months =
`(8)/(12)` years = 0.67 years

Now,

A =
`P \left( 1 + (r)/(n) \right)^{\Large{n \cdot t}}`

Here,

A = total amount

P = principal or amount of money deposited,

n = number of times compounded per year i.e 365 for daily

t = time in years

Thus,

A = $5,000 ×

= $5,000 ×
`( 1.0001437 )^(243.45)`

= $5,000 × 1.035618

= $5,178.09

Hence,

the correct answer is option $5,178.09