On your 5th birthday, your grandparents opened an investment account in your name and made an initial deposit of $2,500. The account pays 4.5 percent interest. How much will you have in the account on your 21st birthday if you don't add or withdraw any money before then?

Question

Mathematics

Rashad Hammond

15 April, 07:12

On your 5th birthday, your grandparents opened an investment account in your name and made an initial deposit of $2,500. The account pays 4.5 percent interest. How much will you have in the account on your 21st birthday if you don't add or withdraw any money before then?

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Answers (1)

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Paige Terrell · Answer 1

Answer: $4,300

Step-by-step explanation:

Firstly, we will get the interest after 16years

Using the formula for calculating simple interest

Interest = Principal*Rate*Time/100

Principal (initial deposit) is $2500

Rate is the percentage interest = 4.5%

Time (in years) will be 16years (since the savings started on my 5th birthday i. e 21-5)

Interest=2500*4.5*16/100

Interest = $1,800

Therefore, amount in the account on my 21st birthday will be Principal+Interest

$2,500+$1,800

= $4,300