Carl deposited $5,142 into a savings account 20 years ago. The account has an interest rate of 3.8% and the balance is currently
$10,994.58. How often does the interest compound?
A. daily
B. monthly
C. quarterly
D. annually
1 answer:
Here is the formula you'll need
Total = Principal * (1 + (rate/n))^n*years
I don't know how to solve that for "n" so we'll use trial and error.
If compounded annually, total =
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10,841.24
</span>
</span>
</span>
If compounded quarterly, total =
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<span>
<span>
10,955.64
</span>
</span></span><span>If compounded monthly, total =
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<span>
10,981.82
</span>
</span>
</span>
If compounded daily, total =
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<span>
<span>
10,994.58
</span>
</span>
</span>
Therefore the answer is "A", daily.
Source:
http://www.1728.org/compint3.htm
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