Posted by Marisol on .
I could only get the first part of this question. Can someone help me with the second part?
You borrow $7000 from a bank for 3 years at an interest rate of 10% per year compounded daily.(Assume there are 365 days in every year)
a) HOw much do you pay the bank back in total?
b)How much interest did the bank earn from you?
A=P(1+i)n( n is an exponent)
After each year of daily componding, the balanced owed increases by a factor
[1 + 0.1/365]^365 = 1.1051558
After three years the balance owed has increased to 7000*(1.1051558)^3 = $9448.62
We pretty much agree. The one cent difference may be due to using a different humber of significant figures.
The interest earned by the bank is all but $7000 of that, $2448.62