SOLUTION: Will someone solve and explain this question:
Q: Mr. Sim invests $9000 at 2% per annum compound interest compounded daily. What is this amount at the end of the third day?
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Q: Mr. Sim invests $9000 at 2% per annum compound interest compounded daily. What is this amount at the end of the third day?
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Question 970240: Will someone solve and explain this question:
Q: Mr. Sim invests $9000 at 2% per annum compound interest compounded daily. What is this amount at the end of the third day? Found 2 solutions by LinnW, AnlytcPhil:Answer by LinnW(1048) (Show Source):
You can put this solution on YOUR website! At 2% per year, the daily interest rate is ( 2% / 365 ).
( 2% / 365 ) = 0.02/365 = 0.0000547945
We need to apply the interest rate over 3 days.
If r is the rate of interest for one day,
(1+r)(1+r)(1+r)*9000 will give us the amount in the account
after 3 days.
(1+r)(1+r)(1+r) = (1+r)^3
so (1+r)(1+r)(1+r)*9000 = (1+r)^3*9000
Since r = 0.0000547945
(1+r)^3*9000 = (1+0.0000547945)^3*9000
= (1.0000547945)^3*9000
= 1.000164392507476207796812933625 * 9000
= approximately 9001.47953
P=9000
R=0.02
N=360 (banks use 360 days a year, because they got started before
calculators or computers were invented. It was easier to
do arithmetic by hand using 360 than 365, and they've never
changed)
T=3/360 (3 days is 3/360th of a year)
Formula:
Edwin
