Question

Burt's grandparents started a savings account for him when he was born. They invested

Answer 1

Answer:

4594.76 USD will be in the account on Burt's 18th birthday.

Step-by-step explanation:

Since interest rate is constant in time, we can use the definition of composite interest to determine how much money will be on Burt's 18th birthday, that is:

$C = C_{o}\cdot \left(1+\frac{r}{100} \right)^{t}$ (1)

Where:

$C_{o}$ - Initial amount, measured in US dollars.

$C$ - Current amount, measured in US dollars.

$r$ - Annual interest rate, measured in percentage.

$t$ - Time, measured in years.

If we know that $C_{o} = 1250\,USD$, $r = 7.5$ and $t = 18$, then the money in the savings account on Burt's 18th birthday is:

$C = (1250\,USD)\cdot \left(1+\frac{7.5}{100} \right)^{18}$

$C = 4594.76\,USD$

4594.76 USD will be in the account on Burt's 18th birthday.