88.5k views
3 votes
George wants to invest his money such that he accumulates $10,000 after 3 and half years at a rate of 4% compounded monthly? How much money should he invest daily?

1 Answer

3 votes

Answer:

$8.77

Explanation:

Using the compound interest formula
A = P(1+(r)/(n) )^(nt)

A = amount compounded (in $)

P = Principal (in $)

r = rate (in %)

t = time it takes to accumulate fund (in years)

n = time of compounding (in years)

Given P = $10,000, r = 4%, t = 3.5 years n = 1/12 years (since it is compounded monthly)


A = 10000(1+(0.04)/((1/12)) )^((3.5)(1/12))\\A = 10000(1+0.48)^(0.2916)\\A = 10000(1.48)^(0.2916)\\A = 10000*1.12111\\A = 11,211.1

Amount he will compound after 3.5years will be $11,211.1.

Amount he should invest daily = Amount compounded/time taken (in days)

Since 3.5years ≈ 1278 days

Amount he should invest daily = $11,211.1/1278

Amount he should invest daily = $8.77

User M Imam Pratama
by
8.0k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories