Question

Suppose you deposited $1,000 in a credit union that pays a nominal rate of 7% with daily compounding and a 365-day year. How much could you withdraw after nine months, assuming this is three-fourths of a year?
a. $1,011.02
b. $1,053.90
c. $ 951.27
d. $1,073.56
e. $ 980.69

Answer 1

Answer:

FV= $1,054.01

Explanation:

Giving the following information:

Initial investment (PV)= $1,000

Number of periods= 365*0.75= 274

Interest rate= 0.07/365= 0.000192

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1+i)^n

FV= 1,000*(1.000192^274)

FV= $1,054.01