Question

Matt Ali deposited $25,000 in a savings account. The account earns 5.5 percent interest compounded daily. Use the formula “ Amount of $1.00 at 5.5 Percent compounded Daily”. A). What amount will he have in his account 28 later ? B.) How much will be compound interest ?

Answer 1

Answer:

A) Amount = $ 116,601.31

B) Compound Interest = $ 91,601.31

Step-by-step explanation:

Compound interest Formula

A = P(1 + r/n)^nt

Where

P = Initial amount invested = $25,000

r = interest rate = 5.5 %

n = Compounding frequency = daily

t = time in years = 28 years

A). What amount will he have in his account 28 years later ?

First, convert R percent to r a decimal

r = R/100

r = 5.5%/100

r = 0.055 per year,

Then, solve our equation for A

A = P(1 + r/n)^nt

A = 25,000.00(1 + 0.000150685/365)^(365)(28)

A = $ 116,601.31

B.) How much will be compound interest ?

I = Amount - Principal

A(Amount ) = $ 116,601.31

P (principal) = $ 25,000.00

I = $ 116,601.31 - $ 25,000.00

I (interest) = $ 91,601.31