Aubrey is going to invest $160 and leave it in an account for 7 years. Assuming the interest is compounded daily, what interest rate, to the nearest tenth of a percent, would be required in order for Aubrey to end up with $220?

Answers

Answer 1

Answer:

4.5%

Step-by-step explanation:

compound interest formula:

[tex]PV(1+\frac{i}{n})^{t*n}[/tex]

[tex]220=160(1+\frac{x}{365})^{365*7}\\\\1.375=(1+\frac{x}{365})^{2555}\\1.0001246=1+\frac{x}{365}\\x=.0454962254126[/tex]

this rounds to

x=4.5%

Answer 2

Aubrey would need an interest rate of 6.3%.

What is compound interest?

It is the interest we earned on the interest.

The formula for the amount earned with compound interest after n years is given as:

A = P [tex](1 + r/n)^{nt}[/tex]

P = principal

R = rate

t = time in years

n = number of times compounded in a year.

We have,

A = P [tex](1 + r/n)^{nt}[/tex]

A = the final amount (in this case, $220)

P = the initial investment (in this case, $160)

r = the interest rate (what we are trying to find)

n = the number of times the interest is compounded per year (since it's compounded daily, n = 365)

t = the time period (in years, in this case, 7)

Substituting in the given values and solving for r:

220 = 160(1 + r/365)^(3657)

220/160 = (1 + r/365)^(3657)

1.375 = (1 + r/365)^2555

ln(1.375) = 2555 ln(1 + r/365)

ln(1 + r/365) = ln(1.375)/2555

1 + r/365 = e^(ln(1.375)/2555)

r/365 = e^(ln(1.375)/2555) - 1

r = 365(e^(ln(1.375)/2555) - 1)

r ≈ 6.3%

Therefore,

Aubrey would need an interest rate of 6.3%.

Learn more about compound interest here:

https://brainly.com/question/13155407

#SPJ3


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Answers

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Answers

Answer:

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Step-by-step explanation:

This is the answer because:

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Hope this helps! :)

Answer:

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