Question

6000 for 6 years at 81/2 % compounded daily will grow to a) $9.990.02 b)9.060.00 c) 9788.81 d)9991.15

Answer 1

d)9991.15

Explanation:

We have a sum of money ($6000) compounded daily at an annual interest rate of 8.5% for 6 years.

If the interest is compound daily, and we take a m=365 days a year (or 365 subperiods m), the daily nominal interest rate is:

`i_d=(i)/(m)=(0.085)/(365)=0.000232877`

Then, we can express the final valueo of $6000 compounded daily at an annual interest rate of 8.5% for 6 years as:

`FV=IV\left(1+(i)/(m)\right)^(n\cdot m)\\\\\\FV=6000(1+0.000232877)^(6\cdot 365)\\\\FV=6000(1.000232877)^(2190)\\\\FV=6000\cdot1.665192322\\\\FV\approx9991.15`