Question

#11 When you were born, your grandparents deposited $10,000 in a CD. for your college education. If theaccount earns 5% interest, compounded monthly, how much will be in the account for your collegeeducation?

Answer 1

`PV\text{ = FV }\ast\text{ }\lbrack\text{ 1 }(\square)/(\square)(1+i)^n\rbrack`

Replacing with the values we already know, we have:

PV = 10,000

i = 5% or 0.05 but it is compounded monthly, then it is 0.05/12

n = 18 years or 216 months

10,000 = FV * 0.4073

FV = 10,000/0.4073

FV = $ 24,551.93

It is very close to option D, where the term "about" is included.