a businessman invested 100,000 in a fund that pays 10.5% compounded annually for 5 years how much was in the fund at the end of the term?
Answers
Step-by-step explanation:
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The total amount in the fund end of the 5 years is 164744.677
Given:
A businessman invested 100,000 in a fund that pays 10.5% compounded annually for 5 years
To find:
How much was in the fund at the end of the term?
Solution:
Formula used:
The formula for the total amount at end of the 'n' years in compound interest is given by
Amount (A) = P (1 + r/n)^nt
From the given data,
Principal amount, P = 100000
Rate of interest, r = 10.5% = 0.105
Number of compounds per year = 1 [ compounded annually ]
The time period, t = 5 years
From the formula, A = P (1 + r/n)^nt
=> Amount (A) = 100000(1 + 0.105/1)^(1)(5)
= 100000(1.105 )⁵
= 164744.677
Therefore,
The total amount in the fund end of the 5 years is 164744.677
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