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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Business

Nylah Pratt

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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Answers (1)

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Cherokee · Answer 1

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