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Question

When Frederick was born, his grandparents gave him a gift of 2000, which was invested at an interest rate of 5% per year, compounded yearly. How much money will Frederick have when he collects the money at the age of 18$? Give your answer to the nearest hundredth of a dollar.

Accepted Answer

Five percent growth corresponds to multiplication by 1+5%=1.05. So, the amount of money Frederick will have in 18 years is 2000(1+.05)^18=4813.24$.