When Peggy Joe was born, her father deposited $2000 in a savings account in her name. At that time the bank was paying 6% interest compounded semiannually on saving accounts. After 10 years, the bank changed to an interest rate of 6% compounded quarterly. How much had the $2000 amounted to after 18 years when money was withdrawn for Peggy to use to help pay her college expenses?
Amount after 10 years is given by: \(2000(1+\frac{0.06}{2})^{20}=3612.22\) Amount after 18 years is given by: \(3612.22(1+\frac{0.06}{4})^{32}=5816.85\) The amount after 18 years was $5816.85.
