Question

Samantha deposits $1,500 into the Park Street Bank. The account pays 4.12% annual interest, compounded daily. To the nearest cent, how much is in the account at the end of three non-leap years?

Answer 1

Samantha will get $1674 after 3 years.

Explanation:

The formula of Compound Interest is:

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

where A = Amount

P = Principle

r = rate

n = Number of Compounding per year

t = total number of year

Here, P = 1500, r = 4.12% = 0.0412, n = 365(Mon-leap years), and t = 3.

Putting all these values in above formula:

`A = 1500(1+(0.0412)/(365))^(365*3)`

⇒
`A = 1500((365.0412)/(365))^(1095)`

⇒
`A = 1500(1.0001)^(1095)`

⇒
`A = 1500(1.116)}`

⇒ A = 1674

Hence, Samantha will get $1674 after 3 years.