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8 June, 09:31

Calculate the future value (in dollars) of $1,550 deposited into an account earning an annual simple interest rate of 4% compounded daily after 3 years. Round to the nearest cent. (Use 365 for the number of days in a year. Enter a number.)

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  1. 8 June, 09:48
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    Answer: the future value is $1748.4

    Step-by-step explanation:

    We would apply the formula for determining compound interest which is expressed as

    A = P (1+r/n) ^nt

    Where

    A = total amount in the account at the end of t years

    r represents the interest rate.

    n represents the periodic interval at which it was compounded.

    P represents the principal or initial amount deposited

    From the information given,

    P = 1550

    r = 4% = 4/100 = 0.04

    n = 365 because it was compounded 365 times in a year.

    t = 3 years

    Therefore,.

    A = 1550 (1 + 0.04/365) ^365 * 3

    A = 1550 (1+0.00011) ^1095

    A = 1550 (1.00011) ^1095

    A = 1550 * 1.128

    A = 1748.4
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