Your parents put $100 in your bank account when you turn 13. If you don't spend any of it for 5 years, and the interest rate is 4% per annum, what will be the balance (total) of your bank account when you turn 18?
Question
Your parents put $100 in your bank account when you turn 13. If you don't spend any of it for 5 years, and the interest rate is 4% per annum, what will be the balance (total) of your bank account when you turn 18?
Solution
To calculate the balance of the bank account, we will use the formula for compound interest, which is:
A = P (1 + r/n) ^ nt
Where:
- A is the amount of money accumulated after n years, including interest.
- P is the principal amount (the initial amount of money).
- r is the annual interest rate (in decimal).
- n is the number of times that interest is compounded per year.
- t is the time the money is invested for in years.
In this case:
- P = $100 (the initial amount of money)
- r = 4% or 0.04 (the annual interest rate)
- n = 1 (interest is compounded once per year)
- t = 5 years
Substituting these values into the formula, we get:
A = 100 (1 + 0.04/1) ^ (1*5) A = 100 (1 + 0.04) ^ 5 A = 100 * 1.04 ^ 5 A = 100 * 1.2166529024 A = $121.67
So, the balance of your bank account when you turn 18 will be approximately $121.67.
Similar Questions
Your parents open a bank account for you when you were born. They deposit $16,000.00 into the account.The account generates 9.9% per annum for 7 years, then 6.2% per annum for 6 years, then 11.7% 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).
Today is your 21st birthday and your bank account balance is $25,000. Your account is earning 6.5% interest compounded quarterly. How much will be in the account on your 50th birthday?
You have $100 and a bank is offering 6.0% interest on deposits. If you deposit the money in the bank, how much will you have in one year?
A grandparent puts $4,000 into a college education fund for a grandchild. If the fund earns 3.75% annual interest compounded daily, what is the value (in dollars) of the account after 18 years? Assume all years have 365 days. (Round your answer to the nearest cent.)
Since your first birthday, your grandparents have been depositing $1000 into a savings account on every one of your birthdays. The account pays 4% 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: a. $36,465. b. $18,000. c. $12,659. d. $25,645. e. None of them.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.