Question

Florence Tyler invests $6,500 in a 4-year certificate of deposit that earns interest at an annual rate of 5% compounded daily. The amount per $1.00 is 1.221386. What is the interest earned to the nearest cent?

Answer 1

Answer:

The total interest earned is $1,439.

Step-by-step explanation:

Consider the provided information:

Florence Tyler invests $6,500 in a 4-year certificate of deposit that earns interest at an annual rate of 5% compounded daily.

Now, Use the formula: $A=P(1+\frac{r}{n} )^{nt}$

Where, A is the total amount (after adding interest), P is the principal (investment or loan), r is the interest rate, n is compound, and t is the time (in years).

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

$A=6500(1+\frac{0.05}{365} )^{4(365)}$

$A=6500(1.00014)^{1460}$

$A=6500(1.22139)$

$A=7939.00918$

Therefore total interest earned is:  

$7,939.00 - $6500 = $1,439.00

Hence, interest earned is $1,439.