Question

find the amount of money in the bank account given the following conditions:

initial deposit= $5000, annual rate= 3%, time= 2 years

Answer 1

http://d.pr/IASx

Answer 2

a = initial deposit, r = 1.03, n = 2

Answer 3

What grade?

Answer 4

11th

Answer 5

says answer is
‎5,304.50

Answer 6

It should be 5000 * (1.03)^2. Assuming compounding of the interest rate.

Answer 7

oh so its 5000(1.03)^2

Answer 8

Gt where dide u get the 1.3 from

Answer 9

At the end of first year, you will have: 5000 + 5000 * 0.03 = 5000 * (1.03).
At the end of second year, you will have: 5000 * (1.03) + 5000 * (1.03) * (0.03)
Because you earn interest in the second year on the interest amount of the first year.

So, that is same as:
5000 * (1.03)^2.

In general, for compounded interest, for n years at rate r and principal p, you get:
p * (1+r)^n

Answer 10

oh yeah compounding of interest...
didnt tought of that

Answer 11

OH

Answer 12

I GET IT NOW GT TANKS

Answer 13

so how do i get the answer

Answer 14

Use a calculator to find:
5000 * (1.03) * (1.03).

That should give you: 5,304.50

Answer 15

yup its correct sir

Answer 16

thanks
it swas 5304.5

Answer 17

Sometimes, these kind of problems can be formulated such that the interest rate "r" is compounded semi-annually or something else. In that case, the "formula" will be similar, but in that case, in p*(1+r)^n, r represents the rate of interest for that period (semi-annually for example) and n represents the total "compounding" periods.

Answer 18

well we all stupidly used simple interest formula..silly me

Answer 19

so what is the p r and n represent in the equation

Answer 20

For example, in this exact same problem, if compounding happened semi-annually, then you will have the following at the end of two years:

5000 * (1+0.015)^4

Answer 21

p is initial amount.
n is number of periods.

Answer 22

r is rate of interest for that period.

Answer 23

principle,rate of interest and time period

Answer 24

so if it were 3000 instead of 5000 and rate was 5.5 and time was 5 years how do i set that up

Answer 25

3000 * (1.055)^5

Answer 26

use the same algorithm

Answer 27

assuming annual compounding.

Answer 28

ok so its similar to the other one

Answer 29

correct.

Answer 30

i got 3920.88

Answer 31

rounded

Answer 32

Sounds right.

Answer 33

did i do it right?

Answer 34

Yeah, I got the same. :)

Answer 35

hmm i guess so..

Answer 36

Oh sorry. My mistake. I gave you the sum formula for geometric progression. The correct formula in this case is:

\[a _{n} = ar ^{n-1}\], but in this case, you would take it as \[a _{n} = ar ^{n}\]

Answer 37

so i did it right :D

Answer 38

yes!!

Answer 39

thakns again everyone

Answer 40

say that to GT