Q&A - Ask Doubts and Get Answers
Q

What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?

31.  What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?

Answers (1)
Views

Given: Bank pays an annual interest rate of 10%  compounded annually.

Rs 500 amounts are deposited in the bank.

At the end of the first year, the amount 

                                                  =500\left ( 1+\frac{1}{10} \right )=500(1.1)

At the end of the second year, the amount =500(1.1)(1.1)

At the end of the third year, the amount =500(1.1)(1.1)(1.1)

At the end of 10 years, the amount =500(1.1)(1.1)(1.1)........(10times)

                                                =500(1.1)^{10}

Thus, at the end of 10 years, amount =Rs. 500(1.1)^{10}

Exams
Articles
Questions