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Suppose you decide to deposit $18,000 in a savings account that pays a nominal rate of 6%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after nine months
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28 votes
28 votes
Suppose you decide to deposit $18,000 in a savings account that pays a nominal rate of 6%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after nine months

User Giovanni Galbo
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2.6k points

1 Answer

18 votes
18 votes

Answer:

FV= $18,827.23

Step-by-step explanation:

Giving the following information:

Initial investment (PV)= $18,000

Interest rate (i)= 0.06/365= 0.000164

Number of periods (n)= (365/12)*9= 274 days

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1 + i)^n

FV= 18,000*(1.000164^274)

FV= $18,827.23

User Stepozer
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2.9k points
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