Question

A newborn child receives a $20,000 gift toward college education from her grandparents. How much will the 20,000 be worth in 17 years if it is invested at 7% and compounded quarterly?

Answer 1

Answer:

The amount the $20.000 will be worth in 17  years at compound interest is $65068.443

Step-by-step explanation:

Here we have the Principal, P = $20,000.00

The annual interest rate, r = 7% = 0.07

Time , t = 17 years

Number of compounding period per year, m = quarterly = 4

The compound interest can be found from the following formula;

$Amount, \ A = P \left (1 + \frac{1}{r} \right )^{mt}$

Therefore, by plugging the values of the equation parameters, we have;

$Amount, \ A = 20000 \left (1 + \frac{0.07}{4} \right )^{4 \times 17} = \ 65068.443$

Therefore, the amount the $20.000 will be worth in 17  years at compound interest = $65068.443.