Question

The formula for compound interest is:

Answer 1

Answer:

Future value, A = $642

Step-by-step explanation:

Given the following data;

Principal = $500

Interest rate = 5% = 5/100 = 0.05

Time, t = 5 years

n = 365

To find the future value, we would use the compound interest formula;

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

Where;

A is the future value.

P is the principal or starting amount.

r is annual interest rate.

n is the number of times the interest is compounded in a year.

t is the number of years for the compound interest.

Substituting into the equation, we have;

$A = 500(1 + \frac{0.05}{365})^{365*5}$

$A = 500(1 + 0.000137)^{1825}$

$A = 500(1.000137)^{1825}$

$A = 500*1.2840$

Future value, A = $642