How to calculate Compounds daily

Question

If $2000 is invested at an interest rate of 6.5% per year, compounded daily, find the value of the investment after the given number of years. (Round your answers to the nearest cent.)

Answer 1

The formula for compound interest is A = P(1 + r/n)^tn, where n is the number of times per year the interest is compounded. "Daily" means that n = 365. Remember that your interest must be converted from a percent to a decimal. So your formula will be A = 2000(1 + .065/365)^365t. Where t is your time in years. Boom. Now you can just plug this into your calculator for any number of years "t" and you're golden.