A mother puts $10,000 into a special bank account on the date of birth of her first born. The account earns interest at a rate o

Question

3 years ago

7

A mother puts $10,000 into a special bank account on the date of birth of her first born. The account earns interest at a rate o

f 4%, and compounds 4 times per year. When the child turns 18, he receives the lump sum. How much will the child receive?

Mathematics

1 answer:

steposvetlana [31] · Answer 1 · 2022-03-26T15:09:46+03:00

steposvetlana [31]3 years ago

3 0

The equation to calculate compound percentage rate is :
A(t) = P(1+(r/n))^(nt)
In this case t is 18 years, we put rate (r), number of compounds per day.
A(18) = 10,000(1+(0.04/4))^(4*18)= 10,000(1.01)^72= $20,470.99

Child will receive $20,470.99 on it's 18 birthday.