Question

Josiah is going to invest $4,800 and leave it in an account for 6 years. Assuming the interest is compounded daily, what interest rate, to the nearest tenth of a percent, would be required in order for Josiah to end up with $5,400?

Answer 1

1.963%

Explanation:

Use the equation for compound interest

`A = P(1 + (r)/(n))^(nt)`

`5400 = 4800(1 + (r)/(365))^((365)(6))\\5400/4800 = 4800(1 + (r)/(365))^((365)(6))/4800\\1.125 = (1 + (r)/(365))^(2190)\\\sqrt[2190]{1.125} = \sqrt[2190]{ (1 + (r)/(365))^(2190)} \\1.0000537836544 = 1 + (r)/(365) \\1.0000537836544 -1 = 1 + (r)/(365) -1\\.0000537836544 = (r)/(365)\\(.0000537836544)(365) = ( (r)/(365))(365)\\.019631 = r`