Question

You have an investment proposition in front of you where you would invest 150 dollars in a project and after 2 years you can sell the investment. You would earn 5% paid annually. How much would you have at the end of year 2?​

Answer 1

$\large{\underline{\underline{\textsf{{\red{Answer :- }}}}}}$

1170 DOLLARS APPROXIMATELY

$\large{\underline{\underline{\textsf{{\green{Explanation :- }}}}}}$

This problem can be solved by using geometric progression where a sequence is formed by multiplying a number "a" with a fixed number "r"

The general term formula is

$=(a) (r)^{n-1}$

where n is the term number

We get 4 percent every year this means (100+4) percent of the actual value at the beginning of the year. Suppose we have 100 rupees, we get (100+4)=104 at the end of the year ( or the starting of 2 year)

• so r= 104 percent= 104/100= 1.04

• n=5 years (since at the end of 4 years, we will have the same value as the beginning of 5 years)

• and a =1000 (starting money)

so money at the end of 4 years(or the starting of 5 years )

$= (1000) (1.04)^{5-1}$

$\begin{lgathered}= (1000) (1.04)^{4} \\=(1000) (1.17)\\=1170\end{lgathered} \: dollars \: approximately$

Answer 2

Given: You have an investment proposition in front of you where you would invest 150 dollars in a project and after 2 years you can sell the investment. You would earn 5% paid annually.

To find: Amount at the end of year 2

Explanation: The amount that is invested is called the principal.

Let the principal be p, rate be r and time be t years.

p= 150 dollars

r= 5% p.a.

t= 2 years

Simple interest earned on it can be calculated by the formula:

p * r * t / 100

= 150 * 5 * 2 / 100

= 15 dollars

Total amount received at the end of year 2

= Principal+ Simple interest

= 150 + 15

= 165 dollars

Therefore, the amount paid at the end of year 2 is 165 dollars.