A grandmother deposited $1,000 in an account that pays 6% per year compounded annually when her granddaughter was born. What will the value of the account be when the granddaughter reaches her 17th birthday?

Answer: $2692.8

Explanation:

From the question, we are told that grandmother deposited $1,000 in an account that pays 6% per year compounded annually when her granddaughter was born. The value of the account be when the granddaughter reaches her 17th birthday goes thus:

Future value = PV (1 + i) ^n

where

PV = present value = $1000

I = interest rate = 6% = 0.06

n = number of years = 17

Future value = PV (1 + i) ^n

= 1000 (1 + 0.06) ^17

= 1000 (1.06) ^17

= 1000 * 2.6928

= $2692.8

The value of the account will be $2692.8 when the granddaughter reaches her 17th birthday.