## monroe17 Group Title Use the formula for computing future value using compound interest to determine the value of an account at the end of 6 years if a principal amount of $2,500 is deposited in an account at an annual interest rate of 7% and the interest is compounded daily. (Assume there are 365 days in a year) The amount after 6 years will be$? 2 years ago 2 years ago

1. monroe17

is it 383,250?

2. monroe17

385,750 ?

3. waterineyes

I don't know the formula for this.. If you tell me the formula, then I might help you...

4. monroe17

I have a bunch of formulas... idk what one to use? there is.. I=prt A=P(1+rt) P+I/n A=P(1+(r/m))^n

5. waterineyes

I think we should go with last one...

6. monroe17

How do I use it.. I have the rate.. which is 0.07 Principal is 2500... what is m and n?

7. monroe17

A=2500(1+(0.07)(6))? or is time 365*6= 2190?

8. monroe17

A=2500(1+(0.07)(2190)

9. waterineyes

No, we will go with last one....

10. monroe17

last formula or the 2190 one?

11. waterineyes

Last formula... Wait, I explain the formula first to you... Please wait...

12. monroe17

okay.

13. waterineyes

Formula is: $A = P(1 + \frac{r}{n})^{n.t}$ This is the formula for calculating amount in case of Compound Interest...

14. waterineyes

Here, A = Amount (that we have to calculate) P = Principle Amount.. (P = 2500) r = Annual Rate of Interest (in Decimal) (r = 0.07) n = Number of Times the Interest is compounded per year..(n = 365) t = Amount of Money accumulated after n years, Including Interest.. (t = 6) Put these values in the formula given above and solve for A.. Can you do it??

15. monroe17

3804.7507

16. monroe17

so to the nearest cent would that be 3804.75

17. waterineyes

How did you solve it show me the steps so that I can verify it...

18. monroe17

A=2500(1+(0.07/365)^365*6 A=2500(1+(0.07/365)^2190 A=2500(1.5219) A=3804.75

19. waterineyes

Thanks for solving it for me.. See, I also don't know the formula but now I know.. Thanks for increasing my knowledge...

20. monroe17

lol, so do you think I did it right?

21. waterineyes

Yes I think so...

22. monroe17

okay thanks.