Question

A person invests $5000 at the beginning of a year in a savings account that off ers a
return of 4.5% compounded annually. At the beginning of each subsequent year an
additional $1000 is invested in the account. How much will there be in the account at
the end of ten years?

Answer 1

$5,000 * 0.045 (Decimal form of %, moving over decimal 2 spaces to the left) = $225
extra $225 every year

$225 + $1,000 ( Annual bonus ) = $1,225 every year extra

1st year = $5,000 + $1,225 = $6,225

$1,225 * 9 remaining years = $11,025

$11,025 + $6,225 = $17,250


After 10 years, $17,250 will be in the bank account if nothing is taken out or removed from the account during that 10 year period of time