Question

If Rs. $1000$ is deposited in a bank which pays annual interest at the rate of $5\%$ compounded annually, find the maturity amount at the end of $12$ years

Answer 1

Rs. $1000$ have been deposited in a bank at interest rate of $5\%$ compounded annually.

The formula for future amount in a compound based interest (calculated annually) is

$A=P{(1+r)}^t$

where $P,r$ and $t$ are the principle amount,interest rate and time(in years) respectively.

Calculating for $P=1000,r=0.05$ and $t=12$

$A=1000{(1+0.05)}^{12}$

$\Rightarrow A\approx$ Rs. $1795.85$