Question

For her 1st birthday, Ruth's grandparents invested $1000 in an 18-year certificate for her that pays 10% compounded annually. How much will the certificate be worth on Ruth's 19th birthday? (Round your answer to the nearest cent.)

Answer 1

Answer:

The certificate will be worth $5,559.92 on Ruth's 19th birthday.

Step-by-step explanation:

The compound interest formula is given by:

$A = P(1 + \frac{r}{n})^{nt}$

Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.

In this problem, we have that:

$P = 1000, n = 1, r = 0.1, t = 18$

So

$A = 1000(1 + \frac{0.1}{1})^{1*18}$

$A = 5559.92$

The certificate will be worth $5,559.92 on Ruth's 19th birthday.