Ali has 500000 now and he also invest 25000 every year at bank @18% per annum for 5 years. find total amount available to him after 5 years?
Answers
Answer:
Step-by-step explanation:
Compound Interest: The future value (FV) of an investment of present value (PV) dollars earning interest at an annual rate of r compounded m times per year for a period of t years is:
FV = PV(1 + r/m)mt
or
FV = PV(1 + i)n
where i = r/m is the interest per compounding period and n = mt is the number of compounding periods.
One may solve for the present value PV to obtain:
PV = FV/(1 + r/m)mt
Numerical Example: For 4-year investment of $20,000 earning 8.5% per year, with interest re-invested each month, the future value is
FV = PV(1 + r/m)mt = 20,000(1 + 0.085/12)(12)(4) = $28,065.30
Notice that the interest earned is $28,065.30 - $20,000 = $8,065.30 -- considerably more than the corresponding simple interest.