Question

Find the value of the investment at the end of 5 years for annual, semiannual, monthly and daily.

Answer 1

To answer this problem, we just have to use the compound interest formula, which is:

`A=P(1+(r)/(n))^(nt)`

n represents the amount of times the interest is compounded for every unit t. For a monthly compound, n = 12, for a daily compound, n = 365. r represents the rate(written as a decimal), P represents the principal, and t the amount of time.

Using the given values, we have:

`\begin{gathered} monthly:A=34900(1+(0.08)/(12))^(12\cdot5)\approx51995.63 \\ daily:A=34900(1+(0.08)/(365))^(365\cdot5)\approx52062.58 \end{gathered}`