You would like to invest an amount in a savings account paying 4% compounded daily. Your goal is to have $10,000 in 10 years. How much should you invest?
A) $345.72
B) $5000
C) $6703.35
D) $6755.64

Question

Quizplus · Accepted Answer

We can use the formula A = P(1+r/n)^(nt), where A is the ending amount, P is the principal (the amount we want to find), r is the interest rate (0.04), n is the number of times the interest is compounded per year (365 since it is daily), and t is the time (10 years). We want to solve for P, so we can rearrange the formula to P = A/(1+r/n)^(nt).
Plugging in the given values, we get P = 10,000/(1+0.04/365)^(365*10) = $6,703.35 (rounded to the nearest cent). Therefore, choice C is the best answer.

You Would Like to Invest an Amount in a Savings