Question

Suppose you decide to deposit $18,000 in a savings account that pays a nominal rate of 6%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after nine months

Answer 1

Answer:

FV= $18,827.23

Explanation:

Giving the following information:

Initial investment (PV)= $18,000

Interest rate (i)= 0.06/365= 0.000164

Number of periods (n)= (365/12)*9= 274 days

To calculate the future value (FV), we need to use the following formula:

FV= PV*(1 + i)^n

FV= 18,000*(1.000164^274)

FV= $18,827.23