1.  Suppose on January 1 you deposit $20,000 in a savings account that pays a quoted interest rate of 4.20 % (APR), with interest added (compounded) daily. How much will you have in your account on December 1, or after 11 months? (Assume N = 334 days) Recall that the interest rate (I/Y) represents the periodic rate based on how many times per YEAR the interest is compounded, hint, this is 365 times per year. Do no interim rounding on the interest rate. As above, and for all TVM type problems, there should be no interim rounding of the interest rates.

To calculate the amount in your savings account on December 1 (after 11 months), we can use the formula for the future value of a present sum with daily compounding:

b) Now suppose you leave your money in the bank for 23 months. Thus, on January 1 you deposit $20,000 in an account that pays a 4.20% (APR), compounded daily. How much will be in your account on December 1 the next year? (Assume N = 699 days). Do no interim rounding on the interest rate. Do no interim rounding on the interest rate.

Answer rating: 100% (QA)

Answer To solve this problem we can use the compound interest formula A P1 rnnt Where A is the futur... View the full answer