Question

Calculate how much more money does $1000 earn in 8 years compounded daily at 3%,

Answer 1

Answer:

To determine the compound interest of a certain investment, the following formula should be used:

X = Initial value (1 + interest rate / number of compositions) ^ years x number of compositions

Thus, in the assumption of an investment of $ 1,000 with interest compounded daily at 3% for 8 years, the formula would be the following:

X = 1,000 x (1 + 3/365) ^ (8x365)

X = 1,271.24

On the other hand, in the case of an investment of $ 1,000 with compound interest every 6 months at 3% for 8 years, the formula would apply as follows:

X = 1,000 x (1 + 3/2) ^ (8x2)

X = 1,268.99