Answer:
$106.50
Step-by-step explanation:
We should use the compound interest formula:
[tex]A=P\left(1+\frac{r}{n}\right)^{nt}[/tex]
Where P is the amount of money invested thus $800
r is the annual rate in decimal form thus 0.125 (since 12.5%/100 yields to that)
n is the number of periods the interest is compound during the year, thus 365 since the interest is compounded daily and there are 365 days in a year.
t is the number of years which is 1 year
And A is the future value after a year.
Therefore, the formula becomes:
[tex]A=800\left(1+\frac{0.125}{365}\right)^{365(1)}[/tex]
We put that in the calculator and we get:
A = $906.50
The interest is the difference between this future value and the money invested:
I = $906.50 - $800 = $106.50
And that is the amount of interest at the end of first year.
