A bank offers an investment account with an annual interest rate of 1.17% compounded daily. Kaitlin invests \$4200 into the account for 2 years. Assuming no withdrawals are made, how much money is in Kaitlin's account after 2 years?

Solution

A bank o ff ers an in v es t m e n t a cco u n t w i t h an ann u a l in t eres t r a t e o f 1.17% co m p o u n d e d d ai l y . K ai tl in in v es t s $4200 in t o t h e a cco u n t f or 2 ye a rs . A ss u min g n o w i t h d r a w a l s a re ma d e, h o w m u c h m o n ey i s in K ai tl i n^{'} s a cco u n t a f t er 2 ye a rs ?

Amount : 4299.44

Solution steps

Translate the problem into an equation:

A = 4200 (1 + \frac{0.0117}{365})^{365 \cdot 2}

4200 (1 + \frac{0.0117}{365})^{365 \cdot 2} = 4299.43728 \dots

Round to the nearest hundredth:

4299.44

Amount : 4299.44