A couple deposits 17,000 into an account earning 2% annual interest for 15 years. Calculate the future value of the investment if the interest is compounded daily. Round your answer to the nearest cent.

Solution

A co u pl e d e p os i t s 17, 000 in t o an a cco u n t e a r nin g 2% ann u a l in t eres t f or 15 ye a rs . C a l c u l a t e t h e f u t u re v a l u e o f t h e in v es t m e n t i f t h e in t eres t i s co m p o u n d e d d ai l y . R o u n d yo u r an s w er t o t h e n e a res t ce n t .

Amount : 22947.41

Solution steps

Translate the problem into an equation:

A = 17000 (1 + \frac{0.02}{365})^{365 \cdot 15}

17000 (1 + \frac{0.02}{365})^{365 \cdot 15} = 22947.41112 \dots

Round to the nearest hundredth:

22947.41

Amount : 22947.41