Solve the application problem. If no interest rate is given, assume % interest compounded daily. Round to the nearest
cent.
-A publishing company deposited $200,000 in a 2-year time deposit earning 6% compounded daily with a Chicago bank as partial collateral for a loan. Find the compound amount and the interest earned.
A)Compound amount = $244,277.21; Interest = $21,032.67
B)Compound amount = $421,032.67; Interest = $1,032.67
C)Compound amount = $221,032.67; Interest = $121,032.67
D)Compound amount = $221,032.67; Interest = $21,032.67

Question

Solve the application problem. If no interest rate is given, assume  % interest compounded daily. Round to the nearest
cent. 
-A publishing company deposited $200,000 in a 2-year time deposit earning 6% compounded daily with a Chicago bank as partial collateral for a loan. Find the compound amount and the interest earned.
A)Compound amount = $244,277.21; Interest = $21,032.67 
B)Compound amount = $421,032.67; Interest = $1,032.67 
C)Compound amount = $221,032.67; Interest = $121,032.67 
D)Compound amount = $221,032.67; Interest = $21,032.67

Quizplus · Accepted Answer

The correct compound amount and interest 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 ($200,000), r is the annual interest rate (6%, or 0.06), n is the number of times that interest is compounded per year (daily compounding means n = 365), and t is the time the money is invested for in years (2 years). The interest earned is the compound amount minus the principal. The calculation matches option D.

Solve the Application Problem