Question

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

Answer 1

Original amount, P $=Rs.500$

Rate of interest, $r=10$% per annum compounded annually

Time, n $=10$ years

Amount, $A=P(1+\frac{r}{100}{)}^n$

$=500(1+\frac{10}{100}{)}^{10}$

$=500(1+0.1{)}^{10}$

$=500\times (1.1{)}^{10}$

$=Rs.1296.87$

So, $Rs.500$ will amount to $Rs.1297$ (approx) in $10$ years.