Question

Use the appropriate compound interest formula to compute the balance in the account after the stated period of time 24,000 is invested for 2 years with an APR of 6​% and daily compounding.

Answer 1

We know the compound interest formula is given by

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

Now, we have been given that 24,000 is invested for 2 years with an APR of 6​% and daily compounding. Thus, we have

`P= 24,000\\ \\ t=2\\ \\ r=0.06\\ \\ n=365`

On substituting these values in the above formula for the compound interest, we get

`A=24000\left ( 1+(0.06)/(365) \right )^(365\cdot 2)\\ \\ \text{On solving this, we get}\\ \\ A=27059.7`

Therefore, the balance in the account after 2 years is 27059.7