Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding based on a 360-day year.How much would be in the account after 8 months, assuming each month has 30 days?
A) $5,178.09
B) $5,436.99
C) $5,708.84
D) $5,994.28
E) $6,294.00

Question

Quizplus · Accepted Answer

The formula for compound interest is 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. In this case, P = $5,000, r = 5.25% or 0.0525, n = 360 (daily compounding), and t = 8/12 years (since 8 months is 8/12 of a year). Plugging these values into the formula gives A = 5000(1 + 0.0525/360)^(360*(8/12)), which calculates to approximately $5,178.09.

Suppose You Deposited $5,000 in a Bank Account That Pays