Question

Suppose you decide to deposit $24,000 in a savings account that pays a nominal rate of 12%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after four months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.) $24,979.57 $25,978.75 $24,230.18 $24,479.98

Answer 1

a.$24,979.57

Step-by-step explanation:

Rate = 12%. Daily rate = 0.12/365 = 0.0003288 = 0.03288%

Number of days in 4 months = 4*365/12

Number of days in 4 months = 122

Amount = Amount deposited * (1+i)^n

Amount = 24000 * (1+.0003288)^122

Amount = 24000 * (1.0003288)^122

Amount = 24000* 1.04092

Amount = $24,982.08