Question

Neal opened a savings account 11 years ago with a deposit of $2,335.69. The account has an interest rate of 4.3% compounded daily. How much interest has Neal earned? (3 points)

$1,412.52

$2,436.12

$1,375.75

$3,748.21

Answer 1

Answer: $1,412.52

Explanation:

Formula to calculate the accumulated amount if P principal invested for t years at a rate of interest r that compounded daily is given by:-

`A=P(1+(r)/(365))^(365t)`

Given: P= $2,335.69

r= 4.3%= 0.043

t= 11 years

Then,

`A=2335.69(1+(0.043)/(365))^(365*11)\\\\=2335.69(1+0.000117808219178)^(4015)\\\\=2335.69(1.000117808219178)^(4015)\\\\= 2335.69(1.6047566747)\\\\=3748.09044309\approx3748.21\\\\\Rightarrow\ A=\$3748.21`

Interest earned = A-P

= $3748.21- 2335.69.

= $1412.52

Hence, Neal earned $1,412.52 as interest.