If your parents deposited $5,000.00 into an account for you when you were born as part of a 529 college savings fund that grew at an average rate of 8% annually,how much will you have in your college savings fund on your 18^th birthday?

Question

Quizplus · Accepted Answer

To find the amount in the college savings fund on the 18th birthday, we use the formula for compound interest: A = P(1 + r/n)^(nt), where A is the amount of money accumulated after n years, including interest, P is the principal amount (the initial amount of money), r is the annual interest rate (decimal), n is the number of times that interest is compounded per year, and t is the time the money is invested for in years. Since the interest is compounded annually (once per year), n = 1. Given P = $5,000, r = 8% or 0.08, and t = 18 years, we substitute these values into the formula:A = 5000(1 + 0.08/1)^(1*18) = 5000(1.08)^18 ≈ $19,980.10.

If Your Parents Deposited $5,000