In: Finance
b) Now suppose you leave your money in the bank for 21 months. Thus, on January 1 you deposit $2,750 in an account that pays an APR of 2.35% compounded daily. How much will be in your account on October 1 of the following year? (assume N = 638 days)
The compound interest formula is: A = P (1 + r/n)nt
Where, A = Future value of investment
P = Principal Amount depositing at the beginning
r = Annual interest rate
n = no of compounding periods in an year
t = no. of years compounding
a) Amount deposited in January 1st (P) = $ 2,750
Annual interest rate (r) = 2.35%
no of compounding periods in an year (n)= 365
Future value of investment (A) = P (1 + r/n)nt
= $ 2,750 (1+0.0235/365)273
= $2,750 x 1.0177
= $ 2798.76
b) Now suppose you leave your money in the bank for 21 months. Thus, on January 1 you deposit $2,750 in an account that pays an APR of 2.35% compounded daily. How much will be in your account on October 1 of the following year? (assume N = 638 days)
Future value of investment (A) = P (1 + r/n)nt
= $ 2,750 (1+0.0235/365)638
= $ 2750 x 1.0419
= $23865.31