Mr. Shivam Goyal deposits Rs. 2000 at the end of every year for five years into his account. Interest is being compounded annually at a rate of 5%. Determine the amount of money he will have at the end of the fifth year.
To calculate the amount of money Mr. Shivam Goyal will have at the end of the fifth year, we need to calculate the future value of his annual deposits.
The formula to calculate the future value of a series of deposits is:
FV = P * ((1 + r)^n - 1) / r
Where:
FV = Future Value
P = Annual Deposit
r = Interest Rate per period
n = Number of periods
In this case:
P = Rs. 2000
r = 5% = 0.05
n = 5 years
Substituting these values into the formula:
FV = 2000 * ((1 + 0.05)^5 - 1) / 0.05
= 2000 * (1.05^5 - 1) / 0.05
= 2000 * (1.2762815625 - 1) / 0.05
= 2000 * (0.2762815625) / 0.05
= 2000 * 5.52563125
= Rs. 11,051.26
Therefore, Mr. Shivam Goyal will have Rs. 11,051.26 at the end of the fifth year.