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You invest $25,000 at an annual rate of 7.25% for one year. What is the difference in interest earned if you compound this money on a daily basis instead of an annual basis

Respuesta :

The difference between the interest compounded daily and the interest compounded annually is $67.13.

What is the interest earned in your money is compounded on an annual basis?

The formula that can be used to determine interest is : FV - amount invested

FV = P (1 + r)^n

Where

  • FV = Future value
  • P = Present value
  • R = interest rate
  • N = number of years

$25,000 (1.0725) = 26,812.50

26,812.50 - $25,000 = $1,812.50

What is the interest earned in your money is compounded on a daily basis?

$25,000x (1 + 0.0725 /365)^365 = 26,879.63

26,879.63 - $25,000 = $1879.63

What is the difference in interest?

$1879.63 -  $1,812.50 = $67.13

To learn more about future value, please check: https://brainly.com/question/18760477

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