If you have $16590.00 to invest, how much interest will you earn on a 5-year investment with an interest rate of 3.40% per annum, compounded daily?
A $3688.86
B $2459.24
C $3074.05
D $3059.38
To calculate the interest earned on a 5-year investment with a 3.40% interest rate compounded daily, we can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = the future value of the investment
P = the principal amount (initial investment)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years
Plug in the given values:
A = $16,590.00(1 + 0.0340/365)^(365 * 5)
A ≈ $16,590.00(1.0000928767123288)^(1825)
A ≈ $16,590.00(1.1792484313374266)
A ≈ $19,574.32
To find the interest earned, subtract the principal amount from the future value:
Interest earned = $19,574.32 - $16,590.00
Interest earned ≈ $2,984.32
Therefore, the correct answer is not listed in the choices.