Question

At the time of her​ grandson's birth, a grandmother deposits $ 3000 in an account that pays 3 % compounded monthly. What will be the value of the account at the​ child's twenty-first​ birthday, assuming that no other deposits or withdrawals are made during this​ period?
The value of the account will be ​$=

​(Round to the nearest dollar as​ needed.)

Answer 1

Answer:

The value of the account will be $5,628

Step-by-step explanation:

we know that    

The compound interest formula is equal to  

$A=P(1+\frac{r}{n})^{nt}$  

where  

A is the Final Investment Value  

P is the Principal amount of money to be invested  

r is the rate of interest  in decimal

t is Number of Time Periods  

n is the number of times interest is compounded per year

in this problem we have  

$t=21\ years\\ P=\ 3,000\\ r=3\%=3/100=0.03\\n=12$  

substitute in the formula above  

$A=3,000(1+\frac{0.03}{12})^{12*21}$  

$A=3,000(1.0025)^{252}$  

$A=\ 5,628$  

therefore

The value of the account will be $5,628