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#interest-calculation
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#finance
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Find the amount of interest $25,000 will earn in 10 years if it is deposited in
an account at 5.99% interest, compounded daily?
Anonymous
Jan 6
Find the amount of interest $25,000 will earn in 10 years if it is deposited in an account at 5.99% interest, compounded daily?
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Jan 6
To find the amount of interest earned, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or the loan is outstanding
In this case, the principal investment amount (P) is $25,000, the annual interest rate (r) is 5.99% or 0.0599 as a decimal, the number of times interest is compounded per year (n) is 365 (since it is compounded daily), and the number of years (t) is 10.
Plugging in these values into the formula, we get:
A = 25000(1 + 0.0599/365)^(365*10)
A = 25000(1 + 0.000164)^3650
A = 25000(1.000164)^3650
A ≈ 25000(1.718)
A ≈ $42,950
To find the amount of interest earned, we subtract the principal investment amount from the future value:
Interest = A - P
Interest = $42,950 - $25,000
Interest ≈ $17,950
Therefore, $25,000 will earn approximately $17,950 in interest over 10 years if it is deposited in an account at 5.99% interest, compounded daily.
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit or loan amount)
r = the annual interest rate (decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or the loan is outstanding
In this case, the principal investment amount (P) is $25,000, the annual interest rate (r) is 5.99% or 0.0599 as a decimal, the number of times interest is compounded per year (n) is 365 (since it is compounded daily), and the number of years (t) is 10.
Plugging in these values into the formula, we get:
A = 25000(1 + 0.0599/365)^(365*10)
A = 25000(1 + 0.000164)^3650
A = 25000(1.000164)^3650
A ≈ 25000(1.718)
A ≈ $42,950
To find the amount of interest earned, we subtract the principal investment amount from the future value:
Interest = A - P
Interest = $42,950 - $25,000
Interest ≈ $17,950
Therefore, $25,000 will earn approximately $17,950 in interest over 10 years if it is deposited in an account at 5.99% interest, compounded daily.
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