Question

$1580 is compounded daily at a rate of 12% for 3 years. Let 1 year = 365 days.

A) $2,187.65

B) $1,898.45

C) $2,315.63

D) $1,996.21

E) $2,002.00

Answer 1

To calculate the compound interest, use the formula Final amount = Principal amount × (1 + interest rate/number of compounding periods)^(number of compounding periods × time). Plugging in the values, the final amount is approximately $2,315.63.

Step-by-step explanation:

To calculate the compound interest, we can use the formula:

Final amount = Principal amount × (1 + interest rate/number of compounding periods)^(number of compounding periods × time)

In this case, the principal amount is $1580, the interest rate is 12%, and the number of compounding periods is 365 (since it is compounded daily). The time is 3 years, which is equivalent to 3 × 365 = 1095 compounding periods.

Plugging in these values, we can calculate the final amount:

Final amount = $1580 × (1 + 0.12/365)^(365 × 3)

Using a calculator, we find that the final amount is approximately $2,315.63.

Therefore, the correct answer is C) $2,315.63.