Answer: $2692.8
Explanation:
From the question, we are told that grandmother deposited $1,000 in an account that pays 6% per year compounded annually when her granddaughter was born. The value of the account be when the granddaughter reaches her 17th birthday goes thus:
Future value = PV(1 +i)^n
where
PV = present value = $1000
I = interest rate = 6% = 0.06
n = number of years = 17
Future value = PV(1 +i)^n
= 1000(1 + 0.06)^17
= 1000(1.06)^17
= 1000 × 2.6928
= $2692.8
The value of the account will be $2692.8 when the granddaughter reaches her 17th birthday.
