Find the amount that results from the given investment. $700 invested at 4\% compounded daily after a period of 4 years: After 4 years, the investement results in how much $?

slaggingV

slaggingV

Answered question

2021-08-04

Calculate the amount that follows the given investment. $700 invested at 4% compounded daily after a period of 4 years: 
After 4 years, the investement results in how much $?

Answer & Explanation

Rivka Thorpe

Rivka Thorpe

Beginner2021-08-10Added 3 answers

Step 1
Compound interest:
In the case of compound interest, interest is reapplied to the principal amount in order to earn interest on that addition during the subsequent compounding period. In other words, compound interest will provide interest on interest. The interest payments will change in the time period in which the initial sum of money stays in the bank or with the barrower.
The general formula for compound interest is,
A=P(1+rn)nt
Where:
A represents the investment loan's projected value, including the loan.
P is the principle amount,
r is the annual interest rate in decimals,
n is the number of times interest is compounded per year,
t is the time of years the money is invested or borrowed.
Step 2
Find the investment results after 4 years:
The invested amount is $700 at 4% compound daily interest.
The goal is to learn the results of the investment after four years.
Here,
The principal amount is P=$700
Annual interest rate is r=4%=0.04,
The number of times interest is compounded per year is daily. That is, n=365.
The number of years the money is invested or time period is t=4 years.
The investment result after 4 years is obtained as $821.4504 from the calculation given below:
A=P×(1+rn)nt
=700×(1+0.04365)365×4
=700×(1+0.04365)1.460
=821.4504
Step 3
Answer:
The investment result after 4 years is $821.4504.

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