As an incentive to attract savings deposits, most financial institutions today offer daily and even continuous compounding. This means that savings, or passbook, accounts, as well as certificates of deposit (CDs), earn interest compounded each day or even more frequently, such as every hour or even every minute. (Continuous compounding, in which compounding occurs every instant, involves a different formula that is derived from the formula we've been using.) Let's take a look at daily compounding. To calculate the compound amount, A, of an investment with daily compounding, use the compound interest formula modified as follows: Rate per period (daily) = (nominal interest rate, i, divided by 365) 365 Number of periods (days), n, = number of days of the investment. A= = P(1 + 365) Calculator Sequence: (1 +(i 365 )) ynx P = A. (Round your answers to the nearest cent.) (a) On April 18, Thomas Ash deposited $2,600 in a passbook savings account at 3.5% interest compounded daily. What is the compound amount (in $) of his account on August 5? $ (b) Using daily compounding, calculate the compound amount (in $) of a $9,000 investment for each of the three CDs. The First National Bank is offering a 5 year CD at 3% interest. The Second National Bank is offering a 5 year CD at 4% interest. The Third National Bank has a 5 year CD at 5.5% interest. First National Bank $ Second National Bank $ Third National Bank $ You are the finance manager for a particular company. The company plans to purchase $2,000,000 in new assembly line machinery in 5 years. (Use Table 11-1 and Table 11-2. Round your answers to the nearest cent.) (a) How much in $) must be set aside now at 6% interest compounded semiannually to accumulate the $2,000,000 in 5 years? $ 1,488,180 (b) If the inflation rate on this type of equipment is 5% per year, what will be the cost (in $) of the equipment in 5 years, adjusted for inflation? $ x (c) Use the inflation-adjusted cost of the equipment to calculate how much in $) must be set aside now. $ (d) Use the present value formula to calculate how much (in $) would be required now if you found a bank that offered 6% interest compounded daily to obtain the value found in part b. (Ignore leap years in calculation.)