Suppose you are managing an account in which you deposit Rs. 20,000 at the end of each year for 20 years. How much amount you have accumulated with the assumption that you earn 5% interest compounded annually.
amount = 20000( 1.05^20 - 1)/.05
= ..
I will let you do the button-pushing on your calculator
101.07
Claire invested $2000 in her bank account earning 2% each years. how many years will it take for her bank account to reach $2100?
To calculate the amount accumulated, you can use the formula for compound interest:
A = P(1 + r/n)^(nt)
Where:
A = final amount
P = principal amount (initial deposit)
r = annual interest rate (as a decimal)
n = number of times interest is compounded per year
t = number of years
In this case, you are depositing Rs. 20,000 at the end of each year for 20 years, with an interest rate of 5% compounded annually.
Step 1: Calculate the total number of times the interest is compounded in 20 years (n).
Since the interest is compounded annually, the interest is compounded once per year. Therefore, n = 1.
Step 2: Plug the values into the formula and solve for A.
A = 20,000(1 + 0.05/1)^(1*20)
Simplifying further:
A = 20,000(1 + 0.05)^20
A = 20,000(1.05)^20
Using a calculator or spreadsheet, raise 1.05 to the power of 20 and multiply the result by 20,000 to find the final amount accumulated.
A ≈ Rs. 58,850.71
Therefore, the accumulated amount after 20 years, assuming a 5% interest rate compounded annually, is approximately Rs. 58,850.71.