Solve the application problem. If no interest rate is given, assume interest compounded daily. Round to the nearest
cent.
-A local business deposited $460,000 in a 2-year time deposit earning 4% compounded daily. At maturity, what is the compound amount and interest earned?
A)$508,375.14; $48,375.14
B)$498,309.87; $38,309.87
C)$561,837.59; $101,837.59
D)$518,645.14; $58,645.14

Question

Solve the application problem. If no interest rate is given, assume  interest compounded daily. Round to the nearest
cent. 
-A local business deposited $460,000 in a 2-year time deposit earning 4% compounded daily. At maturity, what is the compound amount and interest earned?
A)$508,375.14; $48,375.14 
B)$498,309.87; $38,309.87 
C)$561,837.59; $101,837.59 
D)$518,645.14; $58,645.14

Quizplus · Accepted Answer

The compound amount is calculated using the formula A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years. For this problem, P = $460,000, r = 0.04, n = 365, and t = 2. The compound amount is approximately $498,309.87, and the interest earned is $498,309.87 - $460,000 = $38,309.87.

Solve the Application Problem