Question

Caleb is going to invest in an account paying an interest rate of 6% compounded daily. How much would Caleb need to invest, to the nearest cent, for the value of the account to reach $1,900 in 5 years?

Answer 1

To find out how much Caleb would need to invest in an account paying an interest rate of 6% compounded daily, we can use the formula for compound interest: A = P(1 + r/n)^(nt).

Step-by-step explanation:

To find out how much Caleb would need to invest in an account paying an interest rate of 6% compounded daily, we can use the formula for compound interest:

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

Where:

• A = the final amount ($1,900 in this case)
• P = the principal amount (the amount Caleb needs to invest)
• r = the annual interest rate (6% or 0.06)
• n = the number of times that interest is compounded per year (365 for daily compound interest)
• t = the number of years (5 in this case)

Plugging in the given values, we get:

$1,900 = P(1 + 0.06/365)^(365*5)

Solving for P will give us the amount Caleb needs to invest.