Final answer:
The correct answer is b. $19,980.10, which is calculated using the compound interest formula over 18 years with an annual interest rate of 8% on the initial deposit of $5,000.
Step-by-step explanation:
To calculate the amount in a 529 college savings fund that has been compounding annually at an 8% rate, you would use the formula for compound interest, which is A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time in years the money is invested for.
In this case, the principal P is $5,000, the rate r is 0.08, and the time t is 18 years. The interest is compounded annually, so n is 1.
Using the formula, we get:
A = 5000(1 + 0.08/1)^(1*18) = 5000(1 + 0.08)^18 = 5000(3.996) = $19,980.
Therefore, the correct answer is b. $19,980.10.