Question

Question 3: you inherit $145,000 and decide to invest it for 90 days compounded daily at 6% annual interest. after the 90 days, you are going to invest your new-found money in a startup business.
a.how much interest is earned on this investment?

Answer 1

6% annual leads to $2191.21 interest earned over 90 days (3 months), although the number may vary depending on rounding as banks frequently round down. Interest is calculated as 6%/365 increase in the sum per day, with daily compounding meaning the day's interest is added at the end of the day before calculation of the next day's interest.