Question

On September 7, Simple Fitness opened a savings account with a deposit of $16,000. A withdrawal of $5000 was made on October 12, and another withdrawal of $990 was made on November 20. The account earns 3.5% interest compounded daily. Find the balance on November 20 and the total interest earned through that date. Please include the formula used and supporting work.

Answer 1

Ans.

Componded Amount = Principal * ( 1 + rate/365)t

On Sept 7 - Credit Balance = 16,000

Amount in credit on Oct 12 before withdrawl

= 16000 * (1+0.035/365)35

= 16000 * 1.0033616 = 16053.78

Interest from Sept 7 to Oct 12 i.e 35 days = 16053.78 - 16000 = 53.78

On Oct 12 Credit Balance = 16053.78 - 5000 = 11,053.78

Amount in credit on Nov 20 before withdrawl

= 11,053.78 * (1+0.035/365)39

= 11,053.78 * 1.00374654741 = 11,095.19

Interest from Oct 12 to Nov 20 i.e 39 days = 11,095.19 - 11,053.78 = 41.41

Amount in credit on Nov 20 = $ 11,095.19 - $ 990 = $ 10,105.19

The balance on November 20 = $ 10,105.19

Total interest earned through that date = $ 53.78 + $ 41.41 = $ 95.19