Question

3. A bank offers a 2% annual interest rate, compounded annually, for a certain fund. a) Give an
exponential model for a sum of P10,000 invested under this scheme. b) How much money will
there be in the account after 20 years?​

Answer 1

Given : A bank offers a 2% annual interest rate, compounded annually, for a certain fund.

To Find : a) Give an  exponential model for a sum of P10,000 invested under this scheme.

b) How much money will  there be in the account after 20 years

Solution:

P = 10000

R = 2 % per annum

n = 20 Years

A(n) = P(1 + R/100)ⁿ

A(n) = 10000(1 + 2/100)ⁿ

=> A(n) = 10000 (1.02)ⁿ

Amount After n years A(n) = 10000 (1.02)ⁿ  

n = 20

Amount After 20  years A(20) = 10000 (1.02)²⁰  

=  14,859.47

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