Question

Eva invests $6700 in a new savings account which earns 5.8% annual interest, compounded daily. what will be the value of her investment after 3 years? round to the nearest cent.

Answer 1

The value of Eva's investment after 3 years will be approximately $8,108.46. Rounded to the nearest cent, this is $8,108.45.

Explanation:

We can use the formula for compound interest:

• A = P(1 + r/n)^(nt)

where:

• A = the final amount
• P = the principal (starting amount)
• r = the annual interest rate (as a decimal)
• n = the number of times the interest is compounded per year
• t = the time (in years)

In this case, we have:

• P = $6700
• r = 0.058 (since the interest rate is 5.8%)
• n = 365 (since the interest is compounded daily)
• t = 3

Plugging these values into the formula, we get:

• A = 6700(1 + 0.058/365)^(365*3)
• A ≈ $8,108.46

Therefore, the value of Eva's investment after 3 years will be approximately $8,108.46. Rounded to the nearest cent, this is $8,108.45.

Answer 2

$7973.26

Explanation:

PV = $6700

i = 5.8% ÷ 365

n = 3 years · 365

Compound formula

FV = PV (1 + i)^n

FV = 6700 (1 + 5.8% ÷ 365)^(3 · 365)

FV = $7973.26 (rounded to the nearest cent)