Question

Lincoln is going to invest $8,300 and leave it in an account for 10 years. Assuming the interest is compounded daily, what interest rate, to the nearest tenth of a percent, would be required in order for Lincoln to end up with $10,300

Answer 1

Answer: 2.2%

Work Shown

A = P*(1+r/n)^(n*t)

10300 = 8300*(1+r/365)^(365*10)

10300/8300 = (1+r/365)^(3650)

1.240964 = (1+r/365)^(3650)

(1+r/365)^(3650) = 1.240964

1+r/365 = (1.240964)^(1/3650)

1+r/365 = 1.000059

r/365 = 1.000059 - 1

r/365 = 0.000059

r = 365*(0.000059)

r = 0.021535

This result is approximate.

0.021535 converts to 2.1535% which then rounds to 2.2%