Hattie has recently inherited 8100, which she wants to deposit into an IRA account which compounds daily at an annual rate of 5.1%. How much would Hattie's balance be over 3.4 years? Round to two decimal places.

Solution

H a tt i e ha s rece n tl y inh er i t e d 8100, w hi c h s h e w an t s t o d e p os i t in t o an I R A a cco u n t w hi c h co m p o u n d s d ai l y a t an ann u a l r a t e o f 5.1%. Ho w m u c h w o u l d H a tt i e^{'} s ba l an ce b e o v er 3.4 ye a rs ? R o u n d t o tw o d ec ima l pl a ces .

Amount : 9633.55

Solution steps

Translate the problem into an equation:

A = 8100 (1 + \frac{0.051}{365})^{365 \cdot 3.4}

8100 (1 + \frac{0.051}{365})^{365 \cdot 3.4} = 9633.55145 \dots

Amount : 9633.55145 \dots

Round

9633.55145 \dots

to the nearest 2 decimal places:

9633.55

Amount : 9633.55