Answer:
$147,425
Explanation:
Step 1: If a student saves $5 a day for a year, she then has
$5 × 365 days = $1,825
N.b: 365 days makes a year
Step 2: If she invests the yearly savings in a brokerage account that has an expected return of 8%, at the end of a year she would have
$1,825 + (8% of $1,825) at the end of the year.
solving the above, we have
$1,825 + (0.8 × $1,825)
$1,825 + $1,460 = $3,285
At the end of every year after investment, she has $3,285
Step 3: At te age of 65(which is 45 years later; i.e 65years - 20years), she would have saved up
$3,285 × 45 years = $147, 825
At the age of 65, she would have saved up $147,825.
