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Find the value after five years of a $3,000 savings account that pays 3% interest compounded daily.

User Sepultura
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Final answer:

The value of a $3,000 savings account with 3% interest compounded daily after five years is approximately $3,477.82.

Step-by-step explanation:

To find the value of a $3,000 savings account that pays 3% interest compounded daily after five years, we can use the compound interest formula:

A = P(1 + r/n)nt

Where:

  • A is the amount of money accumulated after n years, including interest.
  • P is the principal amount (the initial amount of money).
  • r is the annual interest rate (decimal).
  • n is the number of times that interest is compounded per year.
  • t is the time the money is invested for, in years.

Given:

  • P = $3,000
  • r = 3% or 0.03
  • n = 365 (since the interest is compounded daily)
  • t = 5 years

Plugging in these values:

A = $3,000(1 + 0.03/365)365*5

Calculating this gives us:

A ≈ $3,000(1 + 0.00008219178082)1825

A ≈ $3,000 * 1.1592740741

A ≈ $3,477.82

The savings account will be worth approximately $3,477.82 after five years.

User Oleg Alexander
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