Riley invested 8,500 in an account paying an interest rate of 3.8% compounded daily. Assuming no deposits or withdrawals are made, how long would it take, to the nearest year, for the value of the account to reach 18,040?

Solution

R i l ey in v es t e d 8, 500 in an a cco u n t p a y in g an in t eres t r a t e o f 3.8% co m p o u n d e d d ai l y . A ss u min g n o d e p os i t s or w i t h d r a w a l s a re ma d e, h o w l o n g w o u l d i t t ak e, t o t h e n e a res t ye a r, f or t h e v a l u e o f t h e a cco u n t t o re a c h 18, 040 ?

Time : 19.8

Solution steps

Translate the problem into an equation:

18040 = 8500 (1 + \frac{0.038}{365})^{365 t}

Solve for

t, 18040 = 8500 (1 + \frac{0.038}{365})^{365 t} : t = 19.8

Time : 19.8