Question
Asked Oct 21, 2019
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Suppose that you deposit $10 at the end of each day into a savings account that pays 2% interest compounded daily.  After a year, --------- is in the account?

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Expert Answer

Step 1

Accumulated value can be defined as the sum of investment and interest earned on investment over a specified time period.

It is given that,

Deposit amount on daily basis is $10.

Interest rate is 2% compounded daily. So, interest per day would be (2% ÷ 365).

Step 2

The formula to calculate accumulated value is given below:

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(1+i)"- Accumulated value = Cash flow x| Here, i is interest rate. nis number of periods

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Step 3

Substitute $10 for cash flow, (2% ÷ 365) for i a...

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365 2% -1 365 Accumulated value $10 x 2% 365 1.0202- $10x 0.00005479 = $10x368.68 $3,686.80

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