WestPlaza Holdings sold one of its shopping centres for $20 000 000 and invested the money at a daily compound interest rate of 0.016%. How much interest did the company earn in the first year?

We can calculate the interest earned using the formula for compound interest:

\[
A = P \left(1 + \frac{r}{n}\right)^{nt}
\]

Where:
- $ A $ is the amount of money after interest,
- $ P $ is the principal amount (initial investment),
- $ r $ is the annual interest rate (in decimal form),
- $ n $ is the number of times the interest is compounded per year (daily compounding means $ n = 365 $),
- $ t $ is the time in years.

### Given:
- Principal ($ P $) = $20,000,000
- Daily interest rate = 0.016% = 0.00016 (in decimal)
- $ n = 365 $ (daily compounding)
- $ t = 1 $ year

Now, we'll calculate the total amount after 1 year, then subtract the initial principal to find the interest earned.

\[
A = 20,000,000 \times \left(1 + \frac{0.00016}{1}\right)^{365 \times 1}
\]

Let me calculate this.The interest earned by WestPlaza Holdings in the first year is approximately **$1,202,680.28**.

Would you like more details or have any questions?

Here are some related questions:
1. How would the interest change if the compounding was monthly instead of daily?
2. What would happen if the investment period was 5 years instead of 1 year?
3. How does the formula for simple interest compare to compound interest in this scenario?
4. What if the daily interest rate were halved?
5. How does the investment grow if the interest rate increases by 0.01%?

**Tip:** When compounding daily, even small interest rates can result in significant gains over time due to the frequent compounding periods.

WestPlaza Holdings sold one of its shopping centres for $20,000,000 and invested the money at a daily compound interest rate of 0.016%. How much interest did the company earn in the first year?

Learn how to calculate the interest earned on a $20,000,000 investment with a daily compound interest rate of 0.016%. Using the compound interest formula, this detailed solution demonstrates how WestPlaza Holdings earned approximately $1,202,680.28 in the first year. Ideal for students in Grades 10-12 exploring exponential growth and compound interest.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation