Question

At the time of her​ grandson's birth, a grandmother deposits $1000 in an account that pays 5 %5% compounded monthly. What will be the value of the account at the​ child's twenty-first​ birthday, assuming that no other deposits or withdrawals are made during this​ period?

Answer 1

Answer:

8, 540.00

Explanation:

To calculate the balance at 21 years, we apply the future value formula.

FV = PV × (1+r)n

Where FV is the future value

PV is 3000

r is 5% or 0.05 % per year or 0.00416 per month

n is 21 years or 252 months

FV= 3000 x ( 1 + 0.00416)252

FV = 3000 x 2.84665756

FV = 8, 539.97

FV = 8, 540.00