Question

Alexander Efland has a savings account that earns 5.5% interest compounded daily. On May 5, the amount in the account was $28,214.35. How much interest will the money earn in the next 90 days?

Answer 1

Using compound interest, it is found that $390.6 was earned in interest in the next 90 days.

What is compound interest?

The amount of money earned, in compound interest, after t years, is given by:

$A(t) = P\left(1 + \frac{r}{n}\right)^{nt}$

In which:

• A(t) is the amount of money after t years.

• P is the principal(the initial sum of money).

• r is the interest rate(as a decimal value).

• n is the number of times that interest is compounded per year.

In this problem, the parameters are:

P = 28214.35, r = 0.055, n = 365, t = 3/12 = 0.25.

Hence the amount after 90 days is:

$A(t) = P\left(1 + \frac{r}{n}\right)^{nt}$

$A(90) = 28214.35\left(1 + \frac{0.055}{365}\right)^{365 \times 0.25}$

A(90) = $28,604.95

28604.95 - 28214.35 = $390.6 was earned in interest in the next 90 days.

More can be learned about compound interest at brainly.com/question/25537936

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