Answer:
The value of account will be $7607.15 at the child's 21st birthday.
Step-by-step explanation:
The formula of compound interest:
[tex]A=P(1+\frac rn)^{nt}[/tex]
A= Amount after t years
P= Initial amount.
r = rate of interest
n= Number of interest pay in a year.
Given that, a grandmother deposit $5000 in an account that pay 2% compounded monthly at the time of her grandson's birth,.
Here P= $5000, r= 2%=0.02, n=12 and t= 21 years.
[tex]A=P(1+\frac rn)^{nt}[/tex]
[tex]\Rightarrow A=5000(1+\frac{0.02}{12})^{12\times 21}[/tex]
≈$7607.15
The value of account will be $7607.15 at the child's 21st birthday.
