SOLUTION: Ted won $1000 000 in a lottery. He invested it at 6.25% compounded daily. How much does the money earn in a 30 day month?

Question 1133095: Ted won $1000 000 in a lottery. He invested it at 6.25% compounded daily. How much does the money earn in a 30 day month?
Found 3 solutions by Alex.33, greenestamps, Alan3354:
Answer by Alex.33(110)   (Show Source): You can put this solution on YOUR website!
1000,000*(1+.0625)^30-1000,000=(approximately)$5164078.5116.
[Update:
There's literally no difference between the way others solved this problem and mine. The difference is our interpretation of that '6.25%'
Others have posted different solutions stating 6.25% is actually the ANNUAL interest rate by default. I cannot say if I was wrong or right because when I studied maths in high school (in my hometown) I was told if the question says 'DAILY' or 'monthly' I MUST assume that it was DAILY or monthly interest rate (maybe it wasn't realistic, but we did like that).
Sorry for the inconvenience if all interest rates are presumed ANNUAL in your place, and sorry for causing you this trouble to figure out what I was actually doing. Thanks for your understanding.]
Answer by greenestamps(13215)   (Show Source): You can put this solution on YOUR website!

When the interest rate is quoted as "6.25% compounded daily, it means that 6.25% is the ANNUAL percentage rate. The daily percentage rate is 1/365-th of 6.25%.

So the value of this investment after 30 days is

to the nearest cent.

The amount earned in those 30 days is then $1,005,149.76 - $1,000,000 $5,149.76.
Answer by Alan3354(69443)   (Show Source): You can put this solution on YOUR website!
1/365-th
==================
It's either one 365th, or 1/365.
Not 1/365-th
-----
Unless you're from Banff.
-----------------------------------
I have to correct the programmers periodically on using 1/8th and 1/16th for level readings, and dates such as 6/10/19.
In many countries that would be Oct 6th, not June 10th.
And no AM and PM for time.

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