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.