Question

Suppose you decide to deposit $25,000 into a savings account that pays a nominal rate of 15.60%, but interest is compounded daily. Based on a 365-day year, how much would you have in your account after three months?

Answer 1

the amount after three months is $25,994

Step-by-step explanation:

The computation of the amount after three months is as follows:

As we know that

A = P × (1 + rate of interest ÷ number of compounding period)^number of compounding period × time period

Where,

A = Accrued amount

P = Principal = $25,000

r = 15.60%

t = 3 ÷ 12 = 0.25

So,

A = $25,000 × (1 + 0.156 ÷ 365)^365 × 0.25

= $25,994

Hence, the amount after three months is $25,994