Question

Betty makes daily deposits of $9.94 into a savings account. If the account has an annual rate of 2%, how much interest will she earn after 667 days?

Answer 1

Here we will use the following formula:

FV = PV * (1 + r%)n

where, FV = Future value, PV = Present value = $9.94, r = rate of interest = 2%, n= time period = 667 / 365 = 1.83 years

now, putting theses values in the above equation, we get,

FV = $9.94 * (1 + 2%)1.83

FV = $9.94 * (1 + 0.02)1.83

FV = $9.94 * (1.02)1.83

FV = $9.94 * 1.03690

FV = $10.31

So, in 667 days, $9.94 will become $10.31.

Interest = Future value - Present value

Intetest = $10.31 - $9.94 = $0.37