Question

The principal represents an amount of money deposited in a savings account subject to compound interest at the given rate.

Principle $ 20,000 Rate 5.5% Compounded Daily Time 16 years

Required:
a. Find how much money there will be in the account after the given number of years.​ (Assume 360 days in a​ year.)
b. Find the interest earned.

Answer 1

Kindly check explanation

Explanation:

Given that:

Principal = $20000

Interest rate = 5.5% = 0.055 compounded daily

Time = 16years =(360 * 16) = 5760

n = number of times interest is applied per period

Amount of money in account after 16 years :

A = p(1 + r/n)^nt

A = total amount

A = 20000(1 + 0.055/360)^(360*16)

A = 20000(1 + 0.0001527)^5760

A = 20000(1.0001527)^5760

A = 48193.1611

Interest on principal :

$48193.1611 - $20000

= $28193.1611