What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?

Solution:

The amount deposited in the bank is ₹ 500.

At the end of the first year,

the amount in ₹ = 500 (1 + 1/10)

= 500 (1.1)

At the end of second year, amount in ₹

= 500 (1.1)(1.1)

At the end of third year, amount in ₹

= 500 (1.1)(1.1)(1.1) and so on…

Therefore, at the end of 10 years, amount in ₹

= 500(1.1)(1.1)(1.1) .... 10 times

= 500(1.1)¹⁰

NCERT Solutions Class 11 Maths Chapter 9 Exercise 9.3 Question 31

What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?

Summary:

Therefore, ₹ 500 deposited in a bank for 10 years which pays a 10 percent compound annual interest pays 500(1.1)^10 at the end