Dynoxo Textiles has a cash inflow of $1 million, which it needs for a long-term investment, at the end of one year. It plans to deposit the money in a bank CD that pays daily interest at 4.50 percent. What will be the value of the investment at the end of the year? (Round to the nearest dollar.)
A) $1,020,475
B) $1,000,103
C) $1,037,500
D) $1,046,025

Question

Quizplus · Accepted Answer

The value of the investment is calculated using the formula for compound interest: A = P(1 + r/n)^(nt). Here, P = $1,000,000, r = 0.045, n = 365, and t = 1. Plugging these values in, A = $1,000,000(1 + 0.045/365)^(365*1) ≈ $1,046,025.

Dynoxo Textiles Has a Cash Inflow of $1 Million, Which