Question

Since your birth​, your grandparents have been depositing $ 100 into a savings account every month. The account pays 9​% interest annually. Immediately after your grandparents make the deposit on your 18th​ birthday, the amount of money in your savings account will be closest​ to:

Answer 1

Future Value= $53,635.17

Step-by-step explanation:

Giving the following information:

Since your birth​, your grandparents have been depositing $ 100 into a savings account every month. The account pays 9​% interest annually.

First, we need to calculate the monthly interest rate:

Real interest rate= 0.09/12= 0.0075

Now, using the following formula, we can calculate the future value:

FV= {A*[(1+i)^n-1]}/i

A= monthly deposit= 100

n= 18*12= 216

i= 0.0075

FV= {100*[(1.0075^216)-1]}/0.0075

FV= $53,635.17