Question
A money market fund pays 14% annual interest compounded daily.
What is the value of $10,000 invested in this fund after 15 years?
What is the value of $10,000 invested in this fund after 15 years?
Answers
Reiny
i = .14/365 = .000383561
n = 15(365) = 5475
amount = 10000(1.00038561)^5475 = 81 628.82
Comparing this with "continuous" compounding which would have resulted in
10000(e)^(.14)(15) = 81 661.70
n = 15(365) = 5475
amount = 10000(1.00038561)^5475 = 81 628.82
Comparing this with "continuous" compounding which would have resulted in
10000(e)^(.14)(15) = 81 661.70