Question

Use the appropriate compound interest formula to compute the balance in the account after the stated period of time 24,000 is invested for 2 years with an APR of 6​% and daily compounding.

Answer 1

We know the compound interest formula is given by

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

Now, we have been given that 24,000 is invested for 2 years with an APR of 6​% and daily compounding. Thus, we have

$P= 24,000\\ \\ t=2\\ \\ r=0.06\\ \\ n=365$

On substituting these values in the above formula for the compound interest, we get

$A=24000\left ( 1+\frac{0.06}{365} \right )^{365\cdot 2}\\ \\ \text{On solving this, we get}\\ \\ A=27059.7$

Therefore, the balance in the account after 2 years is 27059.7