Suppose you deposited $5,000 in a bank account that pays 5.25% with daily compounding and a 360-day year.How much could you withdraw 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

Question

Quizplus · Accepted Answer

The formula for compound interest is $A = P(1 + \frac{r}{n})^{nt}$, 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. Given that $P = $5,000$, $r = 5.25\% = 0.0525$, $n = 360$ (daily compounding), and $t = \frac{8}{12}$ years (since 8 months is 8/12 of a year), we can calculate $A$ as follows:$$A = 5000(1 + \frac{0.0525}{360})^{360*(8/12)}$$$$A \approx $5,178.09$$Therefore, after 8 months, you could withdraw approximately $5,178.09.

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