Question

a grandmother deposited $1,000 in an account that pays 8% per year compounded annually when her granddaughter was born. what will the value of the account be when the granddaughter reaches her 13th birthday?

Answer 1

The value of the account when the granddaughter reaches her 13th birthday will be $2720

Compound interest is interest that builds up over a set length of time on both principal and interest. The principal is also used to account for the interest that has accrued on a principal over time. Furthermore, the accumulated principal value is used to calculate interest for the subsequent period.

Principal amount invested = $1000

Rate of return = 8% per year

Time = 13 years

Using the formula we get the following:

A = P(1+r/100)^n

where A = amount

P = principal amount invested

r = rate of return

n = time in years

Substituting the values in the formula we get:

A = 1000(1+8/100)^13

= $2719.62 or $2720

Learn more about compound interest:

brainly.com/question/14295570

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