Question

Your grandparents started a savings account with $10,000 the day you were born. It earns 5% annually compounded monthly. How much will you have when you turn 18?

Answer 1

Answer: You will have $24,551.84 when you turn 18.

Step-by-step explanation:

Formula for accumulated amount earned in t years:

$A=P(1+\dfrac{r}{12})^{12t}$, where P = principal value, r = rate of interest

Given: P= $10000, r = 5% t = 18 years.

Substitute all values in formula, we get

$A=10000(1+\dfrac{0.05}{12})^{12\times18}\\\\=10000(1.004167)^{216}\\\\=10000(2.45518445623)\approx24551.84$

Hence,  you will have $24,551.84 when you turn 18.