Question

Charlie can invest $8,000 at 8.5% interest for 15 days. How much interest will he earn on his investment if the interest is compounded daily?

Answer 1

$27.99 interest.

Explanation:

Use the formula for Compound interest = P(1 + r/n)^t . Here n = 365 (number of days in a year), r = annual rate as a decimal and t = the number of days, P = 8000.

Amount after 15 days = 8,000(1 + 0.085/365)^15

= $8027.99.