Question

Jordan invests $9,500 into an account that earns 3.25% annual interest. How much will
be in the account after 10 years if the interest rate is compounded daily or continuously?
Which compounded interest rate should Jordan choose?

Answer 1

The amount of money that Jordan will earn at the end of 10 years = $12,587.5

Calculation of compounded interests

The principal amount invested(P) = $9,500

The annual compounded daily interest rate(R) of the account = 3.25%

The time given (T) = 10 years

Simple interest (SI) = P×T × R/100

SI = 9,500×10×3.25/100

SI= 308750/100

SI= $3087.50

Therefore the total amount that would be in the account after 10 years = $9,500 + $3,087.50

= $12,587.5

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