Question

When Derrick turned 15, his grandparents put $10,000 into an account that yielded 1.4% interest, compounded quarterly, When Derrick turns 18, his grandparents

will give him the money to use toward his college education. How much does Derrick receive from his grandparents on his 18th birthday?

Answer 1

Answer: $10,428.18

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Step-by-step explanation:

The compound interest formula is

A = P*(1+r/n)^(n*t)

where,

• A = account balance after t years
• P = deposit amount
• r = annual interest rate in decimal form
• n = number of times the money is compounded per year
• t = number of years

The deposit amount is P = 10000 dollars.

The value of r here is r = 0.014 which is the decimal form of 1.4%

n = 4 since we're compounding quarterly, i.e. 4 times a year.

The timespan from when Derrick was 15 to when he became 18 is 18-15 = 3 years, which is the value of t.

Summary of input values:

• P = 10000
• r = 0.014
• n = 4
• t = 3

Let's find the value of "A".

A = P*(1+r/n)^(n*t)

A = 10000*(1+0.014/4)^(4*3)

A = 10428.1800719861

A = 10428.18