Question

Meg deposited a $3,000 bonus check in a new savings account. The account has an interest rate of 3% for 5 years. The interest is compounded daily. How much money did Meg have at the end of the account term?

Answer 1

Given that Meg deposited a $3,000 bonus check in a new savings account. The account has an interest rate of 3% for 5 years. The interest is compounded daily.

Now we need to find about how much money did Meg have at the end of the account term. So we can use compound interest formula which is given by:

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

P = initial deposit = 3000

r = rate of interest =3%=0.03

n= number of periods = 365 (for daily)

t= number of years = 5

Now plug these values into above formula ot get the final value that Meg would have at the end which is given by (A)

$A=3000\left(1+\frac{0.03}{365}\right)^{\left(365*5\right)}$

$A=3000\left(1+0.0000821917808219\right)^{\left(1825\right)}$

$A=3000\left(1.0000821917808219\right)^{\left(1825\right)}$

$A=3000(1.16182708115)$

A=3485.48124345

Hence final answer is approx $3485.48.