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A mother puts $10,000 into a special bank account on the date of birth of her first born. The account earns interest at a rate of 4%, and compounds 4 times per year. When the child turns 18, he receives the lump sum. How much will the child receive?
the equation to calculate compound percentage rate is : A(t) = P(1+(r/n))^(nt) In this case t is 18 years, we put rate (r), number of compounds per day. A(18) = 10,000(1+(0.04/4))^(4*18)= 10,000(1.01)^72= $20,470.99
Child will receive $20,470.99 on it's 18 birthday.
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