Question

What will $$Rs. \ 5000$$ amount to in $$10$$ years, compounded annually at $$10\%$$ per annum? [Use $$(1.1)^{10}=2.594$$]

Answer 1

Given:-

$$P=Rs.\ 5000$$

$$r=10\%$$

$$t=10$$ years

By using the formula to calculate amount on which interest is compounded annually,

$$\begin{aligned}{}A& = P{\left( {1 + \frac{r}{{100}}} \right)^{10}}\\ &= 5000{\left( {1 + \frac{{10}}{{100}}} \right)^{10}}\\& = 5000{\left( {1.1} \right)^{10}}\\& = 5000 \times 2.594\\ &= Rs.\ 12970\end{aligned}$$

Hence, $$Rs.\ 5000$$ will amount to $$Rs.\ 12970$$ in $$10$$ years at rate of interest $$10\%$$ per annum.