Question

A deposit of $30,000 is placed into a scholarship fund that earns a new interest rate of 4.25% compounded daily find the value in dollars in the account after five years assume all years have 365 days round your answer to the nearest cent

Answer 1

The formula for calculating compound Amount is shown below

For the question before us,

P = $30,000

r = 4.25% = 4.25/100 = 0.0425

n = 365

t = 5

Substituting the values into the formula above, we have

$A=30000(1+\frac{0.0425}{365})^{365\text{ x 5}}$

$\begin{gathered} A=30000(1+0.000116438)^{1825} \\ \\ A=30000(1.000116438)^{1825} \\ A=30000(1.2367508) \\ A=37,102.524 \end{gathered}$

A= $37,102.52 (nearest cent)

The value in dollars in the account after five years is $37,102.52 (nearest cent)