An investment of $1,000 is earning interest at the rate of 3.8% compounded daily over 3 years. Approximately how much interest is earned on the investment?

Use the compound-interest formula: the amount is $1,000(1 + 0.038/365)^(365×3), since interest is compounded daily for 3 years. This is approximately $1,120.75, so the interest earned is $1,120.75 − $1,000 = $120.75. The best answer is choice C, $120.75.

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