Given:
Principal value = $1500
Rate of interest = 7% per annum compounded daily
Time = 2 years.
To find:
The amount after 2 years.
Solution:
Formula for amount:
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
Where, P is principal, r is the rate of interest in decimals, n is the number of time interest compounded in an year and t is the number of years.
We know that 1 year is equal to 365 days and the interest compounded daily. So, n=365.
Substituting [tex]P=1500,\ r=0.07,\ n=365,\ t=2[/tex] in the above formula, we get
[tex]A=1500\left(1+\dfrac{0.07}{365}\right)^{365(2)}[/tex]
[tex]A=1500\left(\dfrac{365+0.07}{365}\right)^{730}[/tex]
[tex]A=1500\left(\dfrac{365.07}{365}\right)^{730}[/tex]
Using calculator, we get
[tex]A\approx 1725.39[/tex]
The amount after two years is $1,725.39. Therefore, the correct option is (c).
