Grandmother Smith has just put $12,000 into an investment earning six percent a year for her granddaughter's college education. Approximately how much will be in the account in ten years assuming all the interest is left in the account?

Question

Mathematics

Nemo

18 April, 08:48

Grandmother Smith has just put $12,000 into an investment earning six percent a year for her granddaughter's college education. Approximately how much will be in the account in ten years assuming all the interest is left in the account?

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Zackary Willis · Answer 1

Answer:the amount in the acct after 10 years would be $21490

Step-by-step explanation:

We would apply the formula for compound interest. Initial amount invested into the account is $12000 This means that the principal is

P = $12000

It was compounded annually. This means that it was compounded once in a year. So

n = 1

The rate at which the principal was compounded is 6%. So

r = 6/100 = 0.06

It was compounded for just 10 years. So

t = 10

The formula for compound interest is

A = P (1+r/n) ^nt

A = total amount in the account at the end of t years. Therefore

A = 12000 (1+0.06/1) ^1*10

A = 12000 (1.06) ^10

A = $21490