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Tom deposited $5000 into a bank to earn interest at 6.5% per annum compounded daily for...

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parama9000 | Student, Grade 11 | (Level 1) Valedictorian

Posted September 24, 2013 at 9:54 AM via web

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Tom deposited $5000 into a bank to earn interest at 6.5% per annum compounded daily for 2 years and 9 months.

What was the final amount accumulated, and interest accumulated?

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aruv | High School Teacher | (Level 2) Valedictorian

Posted September 24, 2013 at 10:13 AM (Answer #1)

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Principle deposite of Tom = 5000

rate  of interest = 6.5 % per annum

=(6.5/365)% per day

=`1.780821918xx10^(-4)`  per day

conversion period= 1 day

Time= 2 years and 9 months=1000 (days)

2 years and 9 months = (2 x365+9x30)days.

We

`A=P(1+r%)^n`

where P=principle

r= rate per annum

n= time in year.

conversion period = 1 year

Thus in problem

`A=5000(1+ 1.780821918xx10^(-4))^1000`

`=5000xx1.194904583`

`=5974.52` $

Interest= A-P

=$974.52

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