SOLUTION: the time of her grandson's birth, a grandmother deposits $7000 in an account that pays compounded monthlyWhat will be the value of the account at the child's twenty-first birthday,

Question 1200903: the time of her grandson's birth, a grandmother deposits $7000 in an account that pays compounded monthlyWhat will be the value of the account at the child's twenty-first birthday, assu that no other deposits or withdrawals are made during this period?
Found 2 solutions by greenestamps, ikleyn:
Answer by greenestamps(13200)   (Show Source): You can put this solution on YOUR website!

However you entered the interest rate, it does not show in you post.

But there is no need to re-post, because the method for finding the answer is straightforward.

If the given interest rate is x percent, then that figure is an annual percentage rate; the monthly percentage interest rate is then x/12.

The money is left in the account for 21 years, which is 21*12 = 252 months.

The amount in the account after 21 years is the original amount, multiplied by the growth factor 252 times.

Example: if the annual interest rate is 6%, then the monthly interest rate is 0.5%, which as a decimal is 0.005. The monthly growth factor is then 1+0.005 = 1.005. The amount in the account at the end of 21 years will then be

which to the nearest cent is $24,600.59

Perform the same calculation with the interest rate given in your problem; make sure you express the monthly interest rate as a decimal, as in my example.

Answer by ikleyn(52778)   (Show Source): You can put this solution on YOUR website!
.

To see many other similar (and different) solved problems on compounded interest accounts, look into the lesson
    - Compounded interest percentage problems
in this site.

Learn the subject from there.

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