Question

After 50 years, the balance obtained by investing $900 at a rate if 2.25% with daily compounding, will be $___

a. $1,200

b. $2,000

c. $2,500

d. $3,100

Answer 1

The balance obtained after 50 years with daily compounding and an initial investment of $900 at a rate of 2.25% is approximately $2,500.

Step-by-step explanation:

To find the balance after 50 years with daily compounding, we can use the formula for compound interest: A = P(1 + r/n)^(nt). Where:

• A is the final balance
• P is the principal amount (initial investment)
• r is the annual interest rate (2.25% or 0.0225)
• n is the number of times the interest is compounded per year (365, since it's daily compounding)
• t is the number of years (50)

Substituting the given values:

A = 900(1 + 0.0225/365)^(365 * 50)

Solving this equation, we get:

A ≈ $2,500.