Question

$8390 is compounded daily at a rate of 10%. Find the total amount in the compound interest account at the end of 5 years. (The compound interest factor is 1.64861.)

Answer 1

"Daily" compounding implies compounding 365 days per year.

Using the compound interest formula,

A = $8390 (1+0.10/365)^(365*5)

= $8390(1.000274)^1825

= $8390(1.649) = $13823.52

Under the given circumstances, with compounding 365 days per year, the original $8390 will have grown to $13832.52.

Answer 2

8390(1+0.1)^5=8390(1.1)^5=8390*1.61051=$13512.1789