You inherit exist220,000 and decide to invest it for 28 days compounded daily at

Question

You inherit exist220,000 and decide to invest it for 28 days compounded daily at 6% annual interest. After the 28 days, you are going to invest your new-found money in a startup business. How much interest is earned on this investment? You can either use the Future Value formula or Table 13-2 Future Value Formula FV = P(1 + R)^N Reminder: R = Interest Rate per period (day) Table 13-2: Compound Interest on exist100. Compounded Daily (365 days) (Exact Time. Exact Interest Basis) Reminder - The Table is for compound interest on each exist100. How much money will you have to invest in the startup after the 28 days?

Explanation / Answer

a)

P = 220000, R = 0.06 / 365 per day , N = 28

BY given formula,

FV = P( 1 + R)N

= 220000(1 + 0.06/365)28

= 221014.8531

So interest earned = FV - P = 221014.8531 - 220000

= $1014.853

b)

Money have to invest in startup after 28 days is FV = $221014.8531.

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