Question

Paul deposited $95,000 in a savings account that pays 4% interest compounded daily. What is his balance at the end of six months?

Answer 1

Answer:

$\ 96,919.02$  

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=6/12=0.5\ years\\ P=\ 95,000\\ r=4\%=4/100=0.04\\n=365$  

substitute in the formula above  

$A=95,000(1+\frac{0.04}{365})^{365*0.5}$  

$A=95,000(1+\frac{0.04}{365})^{182.5}=\ 96,919.02$