What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?
The amount deposited in the bank is Rs 500.
At the end of first year, amount = = Rs 500 (1.1)
At the end of 2nd year, amount = Rs 500 (1.1) (1.1)
At the end of 3rd year, amount = Rs 500 (1.1) (1.1) (1.1) and so on
∴Amount at the end of 10 years = Rs 500 (1.1) (1.1) … (10 times)
= Rs 500(1.1)10
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