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Answer this question for me

Answer this question for me-example-1

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Answer:

3.97%

Explanation:

You want to know the annual interest rate, compounded daily, that will result in $43,000 growing to $75,000 in 14 years.

Formula

The formula for the account value is ...

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

where P is the principal invested at annual rate r compounded n times per year for t years.

Application

Filling in the given values, we can solve for r.

75000 = 43000(1 +r/365)^(365·14)

75/43 = (1 +r/365)^5110 . . . . . divide by 43000 and reduce the fraction

Taking the 1/5110 power gives ...

(75/43)^(1/5110) = 1 +r/365 ≈ 1.00010886855

r/365 = 0.0010886855 . . . . subtract 1

r = 0.001086855·365 . . . . . multiply by 365

r ≈ 0.039737 = 3.9737%

The required interest rate is about 3.97%.

User Raad
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