If $8,000 is invested at 6.5% for 7 years, find the future value if the interest is compounded daily. Use a 365-day year.
A) $12,600.09
B) $12,608.88
C) $12,604.73
D) $12,609.08
E) $12,607.83

Question

If $8,000 is invested at 6.5% for 7 years, find the future value if the interest is compounded daily. Use a 365-day year. ​
A) $12,600.09
B) $12,608.88
C) $12,604.73
D) $12,609.08
E) $12,607.83

Quizplus · Accepted Answer

We can use the formula $A=P\left(1+\frac{r}{n}\right)^{nt}$ where A is the future value, P is the principal (initial investment), r is the annual interest rate (as a decimal), n is the number of times compounded per year, and t is the number of years. Plugging in the values given, we get $A=8000\left(1+\frac{0.065}{365}\right)^{365\cdot7}\approx 12608.88$. Therefore, the answer is choice B.

If $8,000 Is Invested at 6