Question

Your grandparents started a savings account with $10,000 the day you were born. It earns 5% annually compounded monthly. How much will you have when you turn 18?

Answer 1

Answer: You will have $24,551.84 when you turn 18.

Explanation:

Formula for accumulated amount earned in t years:

`A=P(1+(r)/(12))^(12t)`, where P = principal value, r = rate of interest

Given: P= $10000, r = 5% t = 18 years.

Substitute all values in formula, we get

`A=10000(1+(0.05)/(12))^(12*18)\\\\=10000(1.004167)^(216)\\\\=10000(2.45518445623)\approx24551.84`

Hence, you will have $24,551.84 when you turn 18.