If your bank account pays annual interest rate of 0.2% and compounds the interest every day,...

If your bank account pays annual interest rate of 0.2% and compounds the interest every day, how much is the future value of $500 saved in the account for 3 years? (include the equation)

Hint: Assume there are 365 days per year.

Expert Solution

We use the formula:
A=P(1+r/365)^365n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=500*(1+0.002/365)^(365*3)

=500*1.00601802

=$503.01(Approx)

jeff jeffy answered 2 years ago

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