Question

$4000 deposit at an apr of 4% with daily compounding for 8 years

Answer 1

EXPLANATION

Let's see the facts:

Investment = Principal = P = 4,000

Interest rate = r = 4% = 0.04 (decimal form)

n= number of times the interest rate is compounding per unit of t = 365

t= time = 8

The compounding interest formula is:

`I\text{ = P(1+}(r)/(n))^(nt)`

Replacing terms:

`I=4,000(1+(0.04)/(365))^(365\cdot8)`

Adding numbers:

`I=4,000(1.000109589)^(2,920)`

Solving the power:

`I=4,000\cdot1.377`

Multiplying numbers:

`I=5,508`

The answer is $5,508