QQuestionFinance
QuestionFinance
How much is $1000 worth at the end of 2 years if the interest rate of 6% is compounded daily?
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Answer
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Step 1:I'll solve this compound interest problem step by step using the compound interest formula.
Step 2:: Identify the Compound Interest Formula
- $$t$$ = Number of years
The formula for compound interest is: Where:
Step 3:: Plug in the Known Values
- $$t = 2$$ (2 years)
- r = 0.06 (6% converted to decimal)
Step 4:: Calculate the Final Amount
A = 1000 \left(1 + \frac{0.06}{365}\right)^{365 \times 2}
Step 5:: Compute the Calculation
A = 1126.80
A = 1000 \times (1.000164384)^{730}
Final Answer
\$1,126.80
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