Question

Given the future of compound interest formula where FV is future value in dollars PV is present value in dollars r is the interest rate as a decimal n is the number of compounding periods per year and T is the number of yearsFV=I deposit of $40,000 is placed into a scholarship fund that earns an annual interest rate of 3.25% compounded daily the account earns interest for three years determine the following values assume all years has 365 daysPV= $ r= n=t= Years Find the value in dollars of the account after three years round your answer to the nearest cent

Answer 1

Given that:

Present value, PV = $40,000

Interest rate, r = 3.25% = 0.0325

Number of periods, n = 365

Number of years, t = 3

Find the future value using the formula

$FV=PV(1+r)^{nt}$

Plug the given values.

$\begin{gathered} FV=40000(1+0.0325)^{365\cdot3} \\ =73446.506 \end{gathered}$

Thus, the future value is $73446.506.