Answer:
We get that option (1) is a better 18th Birthday gift of child by Grandfather.
Step-by-step explanation:
Given that,
Amount deposited in bank at time of birth by Grandfather is $100.
And there is no other deposits and withdrawals for 18 years.
So,
Principal amount =$100
Time = 18 years
Rate of interest of bank = 10.5%
Option 1:- An account That grows by 10.5% each year
we know that Bank give compound interest on the deposit amount
then Compound interest =
∴
Option 2:- An account that grows by $20 each year
Here,
Amount credited in account for 18 years = $20
So, Total amount after completion of 18 years =
=
Hence,
We get that option (1) is a better 18th Birthday gift of child by Grandfather.