Compound Interest Calculation: Suzette's Term Deposit Future Value
What is the future value of Suzette's term deposit?
Given that Suzette invested $700 in a 240-day term deposit at 1.75% p.a., what will be the future value of her deposit?
Future Value Calculation:
The future value of Suzette's $700 deposit after 240 days at a 1.75% p.a. interest rate is approximately $707.08.
To calculate the future value of the deposit, we can use the formula for compound interest:
Future Value = Principal * (1 + (Interest Rate / 365))^(Number of Days)
Where:
Principal = $700
Interest Rate = 1.75% per annum
Number of Days = 240
Plugging in these values and calculating the future value:
Future Value = $700 * (1 + (0.0175 / 365))^240
Note that the interest rate is divided by 365 to convert it from an annual rate to a daily rate.
Calculating this expression:
Future Value = $700 * (1 + 0.0000479)^240
Future Value = $700 * (1.0000479)^240
Future Value ≈ $700 * 1.01154796 ≈ $707.08
Therefore, the future value of Suzette's $700 term deposit after 240 days at a 1.75% p.a. interest rate will be approximately $707.08. Compound interest allows her initial investment to grow over time.
For further explanation on compound interest calculations and financial investments, you can refer to reputable sources or financial experts.