Lori gets an offer from another bank that is also paying 6% on CD’s, but is compounding interest daily. How much will the $1500 CD be worth in:

18 months?

33 months

110.4 months

Step-by-step explanation:

We would apply the formula for determining compound interest which is expressed as

A = P(1 + r/n)^nt

Where

A = total amount in the account at the end of t years

r represents the interest rate.

n represents the periodic interval at which it was compounded.

P represents the principal or initial amount deposited

From the information given,

P = $1500

r = 6% = 6/100 = 0.06

Assuming there are 365 days in a year, then

n = 365 because it was compounded 365 times in a year.

1) For t = 18 months(18/12 = 1.5 years)

Therefore,.

A = 1500(1 + 0.06/365)^365 × 1.5

A = 1500(1.000164)^547.5

A = $1641

2) For t = 33 months(33/12 = 2.75 years)

Therefore,.

A = 1500(1 + 0.06/365)^365 × 2.75

A = 1500(1.000164)^1003.75

A = $1768.5

3) For t = 110.4 months(110.4/12 = 9.2 years)

Therefore,

A = 1500(1 + 0.06/365)^365 × 9.2

A = 1500(1.000164)^3358

A = $2601

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