Question

Washington State Credit Union pays 9.5% interest, compounded daily, from the date of deposit to the date of withdrawal. The daily interest rate (to the nearestmillionths place) for May 23 (91 days in the quarter) on this account is:0.0002540.0002610.0002700.000249None of these choices are correct.

Answer 1

Interest, r, is 9.5%,

Number of days, n, is 91 days,

Let P represent the principal

t is number of times

Where i = (r/365) for daily compounded interest,

$Daily\text{ compounded interest = }P(1+i)^n-P$$\begin{gathered} \text{Daily compounded interest = P(1+}\frac{9.5}{365})^{91}-P \\ =P(1+0.02603)^{91}-P \\ =P(1.02603)-P \\ =1.02603P-P \\ =0.02603 \end{gathered}$

Hence, the best option is B.