Q2 Deposit 1000 at the end of year 1 and increment the depos

Q2: Deposit $1,000 at the end of year 1 and increment the deposit by $100 for the next 4 years, how much money will I have at the end of 5 years in the following scenario? C: 9% interest per year compounded continuously.

Solution

Presented below is the table which highlights closing amount of money on very year including year 5

Year

Addition of principal amount ( $)

Opening amount ($)

Interest accrued ($)

Closing amount($)

1

1000.00

90.00

1090.00

2

100

1190.00

107.10

1297.10

3

100

1397.10

125.74

1522.84

4

100

1622.84

146.06

1768.89

5

100

1868.89

168.20

2037.10

It may be noted that :

Opening amount of for period t = ( Closing amount of period t-1 + Addition of principal amount during period t )

Interest accrued during period t = Opening amount of period t x 0.09

Closing amount of period t = Opening amount of period t + Interest accrued during period t

Amount of money we will have at the end of year 5 = $2037.10

WE WILL HAVE $2037.10 AT THE END OF YEAR 5