Question

How much money would you have if you invested $3000 at 6.25% annual interest, compounded daily for 2 years?

Answer 1

`A\simeq3399.41`

Explanation:

The amount formula in compound interest is:

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

where:

P = principal amount

r = annual interest

n = number of compounding periods

t = number of years

We already know that:

P = $3000

`r = 6.25\% = (6.25\%)/(100\%)=0.0625`

t = 2

n = 365

Then,

`A=3000(1+(0.0625)/(365) )^((365)(2))\\\\A=3000(1+(0.0625)/(365) )^(730)\\\\A=3399.408982\\\\A\simeq3399.41`