Your grandmother has been putting $ 3 comma 000$3,000 into a savings account on every birthday since your first (that is, when you turned 1). The account pays an interest rate of 7 %7%. How much money will be in the account on your 18th birthday immediately after your grandmother makes the deposit on that birthday?

Question

Mathematics

Burke

31 May, 15:12

Your grandmother has been putting $ 3 comma 000$3,000 into a savings account on every birthday since your first (that is, when you turned 1). The account pays an interest rate of 7 %7%. How much money will be in the account on your 18th birthday immediately after your grandmother makes the deposit on that birthday?

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Answers (1)

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Janessa Estes · Answer 1

Answer: there would be $102000 in the account.

Step-by-step explanation:

We would apply the future value which is expressed as

FV = C * [{ (1 + r) ^n - 1}/r]

Where

C represents the yearly payments on each birthday.

FV represents the amount of money

in your account at the end of 18 years.

r represents the annual rate.

n represents number of years or period.

From the information given,

r = 7% = 7/100 = 0.07

C = $3000

n = 18 years

Therefore,

FV = 3000 * [{ (1 + 0.07) ^18 - 1}/0.07]

FV = 3000 * [{3.38 - 1}/0.07]

FV = 3000 * 34

FV = $102000