Question

For the compound interest loan whose terms are given below, find the future value or the amount due the end of the specified time. Principal: $2100 Interest rate: 5.4% Compounding: Daily Time: 3.5 Years Future value: $

Answer 1

Use the compound interest formula:

$A=P(1+\frac{r}{n})^{nt}$

Where:

A = Final amount including principal

P = Principal amount = 2100

r = interest rate = 5.4% = 0.054

t = time = 3.5

n = number of times interest is compounded = 365

$\begin{gathered} A=2100(1+\frac{0.054}{365})^{365\cdot3.5} \\ A=2100(1.208024065) \\ A=2536.850536 \end{gathered}$