Given:
Amount deposited on birth = $10,000.
Interest rate = 5% compound quarterly.
To find:
The balance on the person's 18th birthday.
Solution:
The formula for amount is
[tex]A=P\left(1+\dfrac{r}{n}\right)^{nt}[/tex]
where, P is principal, r is rate of interest, n is number of times interest compounded in an year and t is number of years.
Substitute P=10000, r=0.05, n=4, t=18 in the above formula.
[tex]A=10000\left(1+\dfrac{0.05}{4}\right)^{4(18)}[/tex]
[tex]A=10000\left(1+0.0125\right)^{72}[/tex]
[tex]A=10000\left(1.0125\right)^{72}[/tex]
[tex]A=24459.2026814[/tex]
[tex]A\approx 24459.20[/tex]
Therefore, the balance on the person's 18th birthday is $24459.20.
