Question

Martha's grandfather put $2000 in a savings account for Martha's college fund when she was born. If the account pays three percent interest, compounded quarterly, how much will Martha have for college when she is 18?

Answer 1

Answer: $3,425

Explanation: Quarterly compounding periods for 18 years is 4 x 18 = 72 and the payment amount is $2,000.

2000 (1+.03/4)^72 = 3425.11