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11 July, 01:00

Suppose you decide to deposit $11,000 in a savings account that pays a nominal rate of 6%, but interest is compounded daily. Based on a 365-day year, how much would you have in the account after 12 months? (Hint: To calculate the number of days, divide the number of months by 12 and multiply by 365.)

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  1. 11 July, 02:32
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    I will have $11,680 after 12 months.

    Explanation:

    Future value is the sum of principal amount and compounded interest amount invested on a specific rate for a specific period of time.

    Use following formula to calculate the future value of invested amount

    FV = PV x (1 + r) ^n

    FV = Future Value =

    PV = Present Value =

    r = rate of interest = 6% yearly

    n = number of days = 365 days

    FV = $11,000 x (1 + 6%/365) ^365

    FV = $11,680.14
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