Ngozi’s grandfather gives her N1,000 on each birthday from the age of one to 21. If the money is deposited in the bank paying 9% annual interest, what is the value of Ngozi’s account at age 21?

All_for_one

2 years ago

To find the value of Ngozi's account at age 21, we can use the future value of a series of payments formula. In this case, each birthday she receives N1,000, and the money is deposited in a bank paying 9% annual interest. The formula is as follows:

FV = Pmt x [(1 + r)^n - 1] / r

Where:
FV = Future Value
Pmt = Payment per period
r = Interest rate per period
n = Number of periods

In this case:
Pmt = N1,000
r = 9% or 0.09 (as a decimal)
n = 21 years (from age 1 to 21)

FV = N1,000 x [(1 + 0.09)^21 - 1] / 0.09

Now, calculate this to find the value of Ngozi's account at age 21:

FV ≈ N1,000 x [(1.09^21) - 1] / 0.09

FV ≈ N1,000 x (58.693 - 1) / 0.09

FV ≈ N1,000 x 651.034

FV ≈ N651,034

So, the value of Ngozi's account at age 21 is approximately N651,034.