Question

Find the amount that results from the given investment.$500 invested at 7% compounded daily after a period of 3 yearsAfter 3 years, the investment results in $(Round to the nearest cent as needed.)

Answer 1

Solution:

Given:

$\begin{gathered} P=\text{ \ 500} \\ r=7\text{ \%}=\frac{7}{100}=0.07 \\ t=3 \\ n=365...................compounded\text{ daily} \end{gathered}$

Assuming 365days make a year;

Using the compound interest formula,

$\begin{gathered} A=P(1+\frac{r}{n})^{nt} \\ \\ Substituting\text{ the values into the formula:} \\ A=500(1+\frac{0.07}{365})^{365\times3} \\ A=500(1+\frac{0.07}{365})^{1095} \\ A=\text{ \ }616.83 \end{gathered}$

Therefore, after 3years, the investment results in $616.83