Question

5. You deposit $300 in an account that pays 1.48% annual interest. What is the balance after 1 year if the

interest is compounded daily?
A $304.47
C $368.57
B $301.01
D $301.48​

Answer 1

A. $304.47

Explanation:

We are going to use the compound interest formula to solve:

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

P = initial balance

r = interest rate (decimal)

n = number of times compounded annually

t = time

First, change 1.48% into a decimal:

1.48% ->
`(1.48)/(100)` -> 0.0148

Since the interest is compounded daily, we will use 365 for n. Lets plug in the values now:

`A=300(1+(0.0148)/(365))^(365(1))`

`A=304.47`

The balance after a year is $304.47