Question

Pricilla receives $35,000 from her Uncle Peter and plans to deposit it into an account with investments expected to earn 12% a year, compounded daily. How much money should she expect in the account at the end of 4 years?

A. Pricilla will expect in the account $[insert calculated amount].
B. Pricilla will expect in the account $35,000.
C. Pricilla will expect in the account $42,040.48.
D. Pricilla will expect in the account $40,312.80.

Answer 1

Pricilla should expect approximately $40,312.80 in the account at the end of 4 years.

Step-by-step explanation:

To calculate the future amount in the account, we can use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the future amount, P is the principal amount, r is the rate of interest, n is the number of times interest is compounded per year, and t is the number of years. In this case, Pricilla receives $35,000 as the principal amount, the rate of interest is 12%, interest is compounded daily (so n = 365), and she plans to deposit the money for 4 years (so t = 4).

Substituting the given values into the formula, we get A = 35000(1 + 0.12/365)^(365*4). Evaluating this expression, we find that A ≈ $40,312.80.

Therefore, Pricilla should expect approximately $40,312.80 in the account at the end of 4 years.