Question

Question 10 (3 points)

Lloyd opened a savings account 13 years ago with a deposit of $5,003.86. The account has an interest rate of 3.7% compounded daily. How much interest has Lloyd

earned? (3 points)

a

Ob

$5,189.00

$8,024.70

$3,090.64

$8,094.50

Od

Answer 1

$3,090.64

Explanation:

We shall allocate a random letter to each value, with that I explain the formula.

Initial value of investment = $5,003.86 = P

Rate of interest = 3.7% = R

Compounding interval in a year = 365 = I

Total period = 13 years = T

Value of investment in compound interest formula shall be:

`= P * (1 + (R)/((I))^((I * T))`

Now, putting values in the above equation:

`= 5,003.86 * (1 + (0.037)/(365)) ^((365*13))`

= $8,094.50

Thus, interest earned = Total value of investment on maturity - Initially invested amount

= $8,094.50 - $5,003.86 = $3,090.64