Question

Grandmother Smith has just put $12,000 into an investment earning six percent a year for her granddaughter's college education. Approximately how much will be in the account in ten years assuming all the interest is left in the account?

Answer 1

Answer:the amount in the acct after 10 years would be $21490

Explanation:

We would apply the formula for compound interest. Initial amount invested into the account is $12000 This means that the principal is

P = $12000

It was compounded annually. This means that it was compounded once in a year. So

n = 1

The rate at which the principal was compounded is 6%. So

r = 6/100 = 0.06

It was compounded for just 10 years. So

t = 10

The formula for compound interest is

A = P(1+r/n)^nt

A = total amount in the account at the end of t years. Therefore

A = 12000 (1+0.06/1)^1×10

A = 12000 (1.06)^10

A = $21490