Your parents open a bank account for you when you were born. They deposit $17,000.00 into the account.The account generates 7.8% per annum for 7 years, then 10% per annum for 6 years, then 10% per annum for 5 years.How much money is there in the account when you reach the age of 18?Round your final answer to 2 decimal places. E.g. if the final answer is $12345.8342, please type 12345.83 in the answer box (do not type the dollar sign).
Question
Your parents open a bank account for you when you were born. They deposit 12345.8342, please type 12345.83 in the answer box (do not type the dollar sign).
Solution
To calculate the final amount in the account, we need to apply the formula for compound interest for each period separately and then combine the results.
The formula for compound interest is:
A = P (1 + r)^t
where: A = the amount of money accumulated after n years, including interest. P = principal amount (the initial amount of money) r = annual interest rate (in decimal) t = time the money is invested for in years
First, calculate the amount after 7 years with an interest rate of 7.
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