Solve. Round all dollar amounts to the nearest cent, if necessary.
-$4830 is compounded daily at 10%. Find the total amount in the account after 5 years. (The compound interest factor is 1.64861.)

Question

Quizplus · Accepted Answer

First, we need to find the interest earned each year:

$4830 x 0.10 = $483

Since the account is compounded daily, we use the compound interest factor to find the total amount in the account after 5 years:

$4830 x 1.64861 = $7962.79 First, we need to use the compound interest formula:

A = P(1 + r/n)^(nt)

Where: 
A = the amount after the given time period 
P = the starting principal 
r = the interest rate (as a decimal) 
n = the number of times the interest is compounded per year 
t = the time period (in years)

Plugging in the given values, we get:

A = 4830(1 + 0.1/365)^(365*5) 
A = 4830(1.00027397)^1825 
A = 4830(1.64861) 
A = $7,962.79 (rounded to the nearest cent)

Therefore, the best choice is A, with the correct answer being $7,962.79.

Solve Round All Dollar Amounts to the Nearest Cent, If