Question

Use the formula for computing future value using compound interest to determine the value of an account at the end of 6 years if a principal amount of $2,500 is deposited in an account at an annual interest rate of 7% and the interest is compounded daily. (Assume there are 365 days in a year)

The amount after 6 years will be $?

Answer 1

is it 383,250?

Answer 2

385,750
?

Answer 3

I don't know the formula for this..
If you tell me the formula, then I might help you...

Answer 4

I have a bunch of formulas... idk what one to use?

there is..
I=prt
A=P(1+rt)
P+I/n
A=P(1+(r/m))^n

Answer 5

I think we should go with last one...

Answer 6

How do I use it.. I have the rate.. which is 0.07 Principal is 2500... what is m and n?

Answer 7

A=2500(1+(0.07)(6))? or is time 365*6= 2190?

Answer 8

A=2500(1+(0.07)(2190)

Answer 9

No, we will go with last one....

Answer 10

last formula or the 2190 one?

Answer 11

Last formula...
Wait, I explain the formula first to you...
Please wait...

Answer 12

okay.

Answer 13

Formula is:

\[A = P(1 + \frac{r}{n})^{n.t}\]

This is the formula for calculating amount in case of Compound Interest...

Answer 14

Here,

A = Amount (that we have to calculate)

P = Principle Amount.. (P = 2500)

r = Annual Rate of Interest (in Decimal) (r = 0.07)

n = Number of Times the Interest is compounded per year..(n = 365)

t = Amount of Money accumulated after n years, Including Interest.. (t = 6)

Put these values in the formula given above and solve for A..

Can you do it??

Answer 15

3804.7507

Answer 16

so to the nearest cent would that be 3804.75

Answer 17

How did you solve it show me the steps so that I can verify it...

Answer 18

A=2500(1+(0.07/365)^365*6
A=2500(1+(0.07/365)^2190
A=2500(1.5219)
A=3804.75

Answer 19

Thanks for solving it for me..
See, I also don't know the formula but now I know..
Thanks for increasing my knowledge...

Answer 20

lol, so do you think I did it right?

Answer 21

Yes I think so...

Answer 22

okay thanks.