compound interest ka one example please
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Answer:
HI MATE ! ✰
➨ Example :- ➨
If an amount of $5,000 is deposited into a savings account at an annual interest rate of 5%, compounded monthly, with additional deposits of $100 per month (made at the end of each month). The value of the investment after 10 years can be calculated as follows...
P = 5000. PMT = 100. r = 5/100 = 0.05 (decimal). n = 12. t = 10.
If we plug those figures into the formulae, we get:
Total = [ Compound interest for principal ] + [ Future value of a series ]
Total = [ P(1+r/n)^(nt) ] + [ PMT × (((1 + r/n)^(nt) - 1) / (r/n)) ]
Total = [ 5000 (1 + 0.05 / 12) ^ (12 × 10) ] + [ 100 × (((1 + 0.00416)^(12 × 10) - 1) / (0.00416)) ]
Total = [ 5000 (1.00416) ^ (120) ] + [ 100 × (1.00416)^(120) - 1) / 0.00416) ]
Total = [ 8235.05 ] + [ 100 × (0.647009497690848 / 0.00416) ]
Total = [ 8235.05 ] + [ 15528.23 ]
Total = [ $23,763.28 ]
So, the investment balance after 10 years is $23,763.28.