Question

If the grandchild saves all the money without spending any, what will be the amount in the savings account after 5 years?

A) $1,345.99
B) $1,410.00
C) $1,450.00
D) $1,512.32

Answer 1

To calculate the amount in the savings account after 5 years, we need to use the formula for compound interest. Without knowing the amount the grandchild saves, we cannot calculate the exact future amount. Therefore, none of the given options can be considered as the correct answer.

Step-by-step explanation:

To calculate the amount in the savings account after 5 years, we need to use the formula for compound interest. The formula is given as: A = P(1 + r/n)^(nt), where A is the future amount, P is the principal (initial amount), r is the annual interest rate, n is the number of times interest is compounded per year, and t is the number of years.

1. Let P be the amount the grandchild saves without spending it, which is the principal amount. We don't have this information, so we cannot calculate the exact future amount.
2. Let's assume the annual interest rate is 7% and interest is compounded annually, so n = 1.
3. Let t = 5 years.
4. Substitute the values into the formula: A = P(1 + r/n)^(nt) = P(1 + 0.07/1)^(1*5) = P(1 + 0.07)^5 = P(1.07)^5

Therefore, without knowing the amount the grandchild saves, we cannot calculate the exact future amount. Therefore, none of the given options (A) $1,345.99, (B) $1,410.00, (C) $1,450.00, (D) $1,512.32) can be considered as the correct answer.