Question

For a starting dollar amount of $11,361 and an annual interest rate of 6.33%

compounded daily, use the Compound Interest Formula to find the final dollar AMOUNT
after 8 years

O$18,726.85
O$18,915.25
$18,898.33
$19.014.10
$18,850.56

Answer 1

The final amount after 8 years with a starting dollar amount of $11,361 and a 6.33% annual interest rate compounded daily is approximately $18,726.85.

Step-by-step explanation:

To find the final amount of money after 8 years with daily compounded interest, we use the formula A = P(1 + r/n)^(nt), where:

• P is the principal amount ($11,361)
• r is the annual interest rate (6.33% or 0.0633)
• n is the number of times interest is compounded per year (daily compounding implies n = 365)
• t is the time the money is invested or borrowed for, in years (t = 8 years)

Plugging the values into the formula gives us:

A = $11,361(1 + 0.0633/365)^(365*8)

This calculation gives us the final amount which is the sum of the principal and the compound interest over the 8 year period. Using a calculator, we find that the final amount approximates to $18,726.85.

Compound interest can substantially increase the final amount over time compared to simple interest, particularly with larger sums of money and longer time frames as shown by the compound interest formula.