Question

Garrett has deposited $519 in a savings account that earns interest at a rate of 4.2% compounded daily. What will the account balance be in 17 years?

Answer 1

Interest rates are usually given as 'per year' so if the compounding is happening daily, you need to divide 0.042 by 365 to get the daily rate.

Answer 2

Then multiply 17 by 365 (really 365.25 for leap years) to find the number of compounding periods.

Answer 3

Write out your equation first and identify each of the variables

Answer 4

You can get a good estimate using the 'rule of 72.'
72 divided by the interest rate gives you the approximate doubling time. Coincidentally, 72/4.2 = about 17 years, so 519$ at 4.2% for 17 years should approximately double. You can use 519×2 as an estimate to check if you've evaluated the formula correctly.

Answer 5

A being what he had deposited initially.
R being your rate which is 0.042
n being the number of times it gets compounded in a year
t being the number of years.
Plug and chug my friend!