Calculate the compound amount. Use the compound amount formula and a calculator. (Round your answer to two decimal places.)

P = $9500, r = 8% compounded daily, t = 5 years

1 answer

To calculate the compound amount using the formula for compound interest, we can use the formula:

\[ A = P \left(1 + \frac{r}{n}\right)^{nt} \]

Where:

  • \( A \) is the amount of money accumulated after n years, including interest.
  • \( P \) is the principal amount (the initial amount of money) = $9500
  • \( r \) is the annual interest rate (decimal) = 8% = 0.08
  • \( n \) is the number of times that interest is compounded per year = 365 (since it is compounded daily)
  • \( t \) is the number of years the money is invested or borrowed = 5

Now, substituting the values into the formula:

\[ A = 9500 \left(1 + \frac{0.08}{365}\right)^{365 \times 5} \]

First, calculate \( \frac{0.08}{365} \):

\[ \frac{0.08}{365} \approx 0.0002191781 \]

Then, calculate \( 365 \times 5 = 1825 \).

Now, we plug these values back into the equation:

\[ A = 9500 \left(1 + 0.0002191781\right)^{1825} \]

Calculating \( 1 + 0.0002191781 \):

\[ 1 + 0.0002191781 \approx 1.0002191781 \]

Now raise this to the power of 1825:

\[ \left(1.0002191781\right)^{1825} \approx 1.48985 \text{ (approximately)} \]

Now, multiply this value by the principal:

\[ A \approx 9500 \times 1.48985 \approx 14154.57 \]

Therefore, the compound amount after 5 years is approximately:

\[ \boxed{14154.57} \]