North Island Federal Credit Union pays 5% annual interest, compounded daily, on time savings deposits. Find the value of $950 deposited in this account after 1 year. Round your answer to the nearest cent.

Question

Quizplus · Accepted Answer

The value of the deposit after 1 year can be calculated using the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Plugging in the given values: A = $950(1 + 0.05/365)^(365*1) ≈ $998.70.

North Island Federal Credit Union Pays 5% Annual Interest, Compounded