Bucher Credit Bank is offering 6.2 percent compounded daily on its savings accou
ID: 2650388 • Letter: B
Question
Bucher Credit Bank is offering 6.2 percent compounded daily on its savings accounts. Assume that you deposit $5,900 today.
How much will you have in the account in 6 years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Round your answer to 2 decimal places (e.g., 32.16).)
How much will you have in the account in 12 years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Round your answer to 2 decimal places (e.g., 32.16).)
How much will you have in the account in 24 years? (Enter rounded answer as directed, but do not use rounded numbers in intermediate calculations. Use 365 days in a year. Round your answer to 2 decimal places (e.g., 32.16).)
Bucher Credit Bank is offering 6.2 percent compounded daily on its savings accounts. Assume that you deposit $5,900 today.
Explanation / Answer
Future value = Present value[ (1+ Interest rate /Compounding per period )]^ Number of time amount is compounded
1) Future value = 5900 [(1+.062/365)]^2190
= 5900 [(1+.00017)]^2190
= 5900 [1.00017]^2190
= $ 8,558.46 [Value can be calculated using financial calculator
or using future value table]
**Number of time amount is compounded = Number od days in a year* Number of times amount iks deposited for
= 365* 6
= 2190
2)Future value if amount is deposited for 12 years = 5900[(1+.062/365)]^ 4380
= 5900[(1.00017)]^4380
= $ 12,414.80
**Number of compounding period = 365*12 = 4380 days
3)Future value if amount is invested for 24 years = 5900[(1+.062/365)]^ 8760
= 5900[(1.00017)]^8760
= $ 26,123.26
Number of times compounded= 365*24 = 8760
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