If a man saves $6000 each year for 7 years and reinvests his interest at a 5 percent interest rate annually, how much will he have a that the end of year 7?
To determine how much the man will have at the end of year 7, we need to calculate the total amount he saves each year and the interest earned on those savings.
First, let's find the total amount saved over 7 years:
$6000 saved each year for 7 years = $6000 * 7 = $42000
Next, let's calculate the interest earned on those savings each year:
Year 1: $42000 * 5% = $2100
Year 2: ($42000 + $2100) * 5% = $2205
Year 3: ($42000 + $2100 + $2205) * 5% = $2315.25
...
Year 7: ($42000 + interest accumulated from previous years) * 5%
To calculate the interest accumulated from previous years, we need to find out the sum of interest for the first 6 years:
Interest Accumulated = Year 1 interest + Year 2 interest + ... + Year 6 interest
Year 1 interest: $42000 * 5% = $2100
Year 2 interest: ($42000 + $2100) * 5% = $2205
Year 3 interest: ($42000 + $2100 + $2205) * 5% = $2315.25
Year 4 interest: ($42000 + $2100 + $2205 + $2315.25) * 5% = $2431.01
Year 5 interest: ($42000 + $2100 + $2205 + $2315.25 + $2431.01) * 5% = $2552.56
Year 6 interest: ($42000 + $2100 + $2205 + $2315.25 + $2431.01 + $2552.56) * 5% = $2679.19
Now we can find the total amount the man will have at the end of year 7:
End of Year 7 = $42000 + Year 7 interest
Year 7 interest = ($42000 + $2100 + $2205 + $2315.25 + $2431.01 + $2552.56 + $2679.19) * 5%
By calculating the Year 7 interest, we can find the final amount at the end of year 7.