Question

Suppose that when Emma was born, her grandparents deposited $20,000 into an account paying 5% interest compounded quarterly. What will the balance be when Emma turns 18? Round to the nearest cent

Answer 1

Answer: The balance when Emma turns 18 = $ 48,132.38

Explanation:

When interest is compounded quarterly, the accumulated amount after t years will be :

`A= P(1+r)^t`

, where P = principal, r= rate of interest( in decimal)

Given: P= $ 20,000 , r= 5% =0.05

t = 18 years

`A = 20000(1+0.05)^(18)\\\\= 20000(1.05)^(18)\\\\= 20000(2.406619)\\\\=\$\ 48,132.38`

The balance when Emma turns 18 = $ 48,132.38