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Question

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


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Solution

Step 1: Find Compound interest.

In compound interest, the amount after t years is computed as,

Amount=Principal×1+rate100time

Given that, Principal=Rs.500,Rate=10% and time=10years.

Substitute all values in the above expression.

Amount=500×1+1010010=500×111010=Rs.1,296.87

Hence, after 10 years the amount will be Rs.1296.87.


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