Since your first birthday, your grandparents have been depositing $1 000 into a savings account on every one of your birthdays. The account pays 4% interest annually. Immediately after your grandparents make the deposit on your 18th birthday, the amount of money in your savings account will be closest to:

Question

Quizplus · Accepted Answer

This problem can be solved using the formula for the future value of a series of equal payments (annuities). The formula is FV = P * [(1 + r)^n - 1] / r, where P is the payment amount, r is the annual interest rate, and n is the number of payments. Here, P = $1,000, r = 0.04 (4%), and n = 18. Plugging these values into the formula gives a future value of approximately $25,645, which is closest to option D.

Since Your First Birthday, Your Grandparents Have Been Depositing $1