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24 July, 12:24

At the time of her grandson's birth, a grandmother deposits $1000 in an account that pays 5 %5% compounded monthly. What will be the value of the account at the child's twenty-first birthday, assuming that no other deposits or withdrawals are made during this period?

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  1. 24 July, 12:46
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    8, 540.00

    Explanation:

    To calculate the balance at 21 years, we apply the future value formula.

    FV = PV * (1+r) n

    Where FV is the future value

    PV is 3000

    r is 5% or 0.05 % per year or 0.00416 per month

    n is 21 years or 252 months

    FV = 3000 x (1 + 0.00416) 252

    FV = 3000 x 2.84665756

    FV = 8, 539.97

    FV = 8, 540.00
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