182k views
2 votes
If $8,000 is invested at an annual interest rate of 1.83%, compounded daily, what will the investment be worth after 10 years?

If $8,000 is invested at an annual interest rate of 1.83%, compounded daily, what-example-1
User Pavels
by
5.5k points

1 Answer

6 votes

Answer: $9606.41

Explanation:

We would apply the formula for determining compound interest which is expressed as

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

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $8000

r = 1.83% = 1.83/100 = 0.0183

Assuming there are 365 days in a year, then

n = 365 because it was compounded 365 times in a year.

t = 10 years

Therefore,

A = 8000(1 + 0.0183/365)^365 × 10

A = 8000(1 + 0.000050137)^3650

A = 8000(1.000050137)^3650

A = $9606.41

User Eric Martori
by
5.3k points