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At the time of her grandson's birth, a grandmother deposits $1000 in an account that pays 2.5% compounded monthly. What will be the value of the account at the child's twenty-first birthday, assuming that no other deposits or withdrawals are made during this period? The value of the account will be $

User Liruqi
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1 Answer

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We will use the formula;


A\text{ }=\text{ P(1+}(r)/(n))^(nt)

where A is the amount

P is the prncipal also known as the initial amount

r is the rate

t is the time

n is the number of interest pay in a year

A is the amount after t years

From the question;

p = $1000

r = 2.5% = 0.025

t= 21

n = 12

Substitute the values into the formula


A=1000(1+(0.025)/(12))^(12*21)

Evaluate:


A=1000(1.00208333333)^(252)
A=1000\text{ (1.689}53589855)

A = $1689.5359

The value of the account will be $1689.5359

User Tenusha Guruge
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