Question

The Kellys are saving up to go on a family vacation in 2 years. They invest $3200 into an account with an annual interest rate of 1.13% compounded daily.
Answer the questions below. Do not round any intermediate computations, and round your final answers to the nearest cent. If necessary, refer to the
list of financial formulas. Assume there are 365 days in each year.

Answer 1

Answer:

$3,273.14

Step-by-step explanation:

-We first calculate the effective interest rate of 1.13% compounded daily:

$i_m=(1+i/m)^m-1\\\\=(1+0.0113/365)^{365}-1\\\\=0.011363909$

#Now, we calculate the compounded amount after 2 years using this rate:

$A=P(1+i)^n\\\\=3200(1.011363909)^2\\\\\\=3273.14$

Hence, the compounded amount after 2 years is $3,273.14