Question

If you invest $14,766 today at an interest rate of 3.59 percent, compounded daily, how much money will you have in your savings account in 13 years?

Answer 1

Formula for compound interest:

A = P x (1 + r/m) ^{m x t}

A = Future value of investment

P = Principal = $ 14,766

r = Rate of interest = 3.59 % p.a.

m = No. of compounding in a year= 365

t = No. of years = 13

A = $ 14,766 x (1 + 0.0359/365) ^365x13

   = $ 14,766 x (1.00009835616) ^365x13

   = $ 14,766 x (1.00009835616) ⁴⁷⁴⁵

   = $ 14,766 x 1.594686316

    = $ 23,547.13815 or $ 23,547.14

Account balance will be $ 23,547.14 in 13 years.