Question

9.

Diane Barvello deposits $1,380 in a certificate of deposit for 3 years.
Find the compound amount if the interest rate is 5% compounded daily.


$1,587.00

$1,603.31

$1,597.53

$1,603.32

Answer 1

Using Compound interest formula:

The exponential function for calculating the amount of money after t years, A(t), where P is the initial amount or principal, the annual interest rate is r and the number of times interest is compounded per year is n, is given by

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

from the given information:
p = 1,380 , r = 0.05 , t =3 and compounded daily ⇒⇒⇒ n =365

Amount after 3 years =

`A(t) = 1380(1+ (0.05)/(365) )^(365*3)` = 1,603.315