Question

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

Answer 1

The amount deposited in the bank is Rs 500.
At the end of first year, amount = Rs $5500 (1 + \frac{1 }{ 10}) = Rs \,\,500 \,(1.1)$
At the end of 2nd year, amount = Rs 500 (1.1) (1.1)
At the end of 3rd year, amount = Rs 500 (1.1) (1.1) (1.1) and so on
∴ Amount at the end of 10 years = Rs 500 (1.1) (1.1) … (10 times)
= Rs 500 (1.1)10.