Case Study: Population Modeling: Quiz


Problem 3

Banks typically convert the stated annual percentage rate of interest earned into a daily rate, equal to 1/365 of the annual rate. Suppose an account with a starting balance of $100 earns annual interest of 4%. What would be the balance at the end of the year if the interest is compounded daily?


Answers, problem 3

Balance at the end of the year = 100(1 + 0.04/365)365

= $104.08


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