Honglan R. answered • 03/25/20
Writing A College Algebra Reference Book, Apply Educational Psychology
Sarah invested $3,800 in an account paying an interest rate of 3.6% compounded daily. Assuming no deposits or withdrawals are made, how much money, to the nearest hundred dollars, would be in the account after 15 years?
formula for compound interest is A=p(1+r/n)^nt.
Tricky things is that what value goes to n. The problems says "compounded daily". so calculate how many days a year, there are 365 days a year, so n=365.
A=p(1+r/n)^nt.
A=3800(1+0.036/365)^(365x15)
A≈6520.65
After 15 years, you will have $6,520.65 in your account.
Let us change the problem as "compounded monthly." so calculate how many month a year, there are 12 month a year, so n=12.
A=p(1+r/n)^nt.
A=3800(1+0.036/12)^(12x15)
A≈6515.55
After 15 year, you will have $6,515.55 in your account.
AS YOU SEE, COMPOUND DAILY AND COMPOUND MONTHLY DOESN'T MAKE MUCH DIFFERENCE.
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