Bucher Credit Bank is offering 6.3 percent compounded daily on its savings accou

Question

Bucher Credit Bank is offering 6.3 percent compounded daily on its savings accounts. Assume that you deposit $6,000 today.

How much will you have in the account in 4 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Use 365 days in a year.)

Future value            $

How much will you have in the account in 8 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Use 365 days in a year.)

Future value            $

How much will you have in the account in 16 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Use 365 days in a year.)

Future value            $

Explanation / Answer

Answer:

Future Value = Present Value * (1 + r) ^ n

Part 1.
Present Value = $6,000
r = 6.3% per year or 6.3% / 365 = 0.01726% per day
n = 4 years or 4 * 365 = 1,460 days

Future Value = 6,000 * (1 + 0.0001726)^1460
Future Value = 6,000 * 1.0001726^ 1460
Future Value = 6,000 * 1.286563
Future Value = $7,719.38

Part 2.
Present Value = $6,000
r = 6.3% per year or 6.3% / 365 = 0.01726% per day
n = 8 years or 8 * 365 = 2,920 days

Future Value = 6,000 * (1 + 0.0001726) ^2920
Future Value = 6,000 * 1.0001726^ 2920
Future Value = 6,000 * 1.6552441
Future Value = $9,931.46

Part 3.
Present Value = $6,000
r = 6.3% per year or 6.3% / 365 = 0.01726% per day
n = 16 years or 16 * 365 = 5,840 days

Future Value = 6,000 * (1 + 0.0001726) ^5840
Future Value = 6,000 * 1.0001726^ 5840
Future Value = 6,000 * 2.7398331
Future Value = $16,439.00

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