Question

I am putting 100 in my savings account for my newborn so that it can collect interest. if the bank has an in interest rate of 5% and we leave it in there for 18 years, how much interest will there be? how much altogether will be in the savings account?

Answer 1

Total amount is 190.

Given:

Initial investment is, P = 100.

Rate of interest is, r = 5% = 0.05.

Number of years is, n = 18 years.

The objective is to find the interest amount after 18 years.

The interest amount can be calculated by the formula of,

`A=P\cdot n\cdot r`

Now, substitute the given values in the above equation.

`\begin{gathered} A=100\cdot18\cdot0.05 \\ A=90 \end{gathered}`

Thus, the interest after 18 years is 90.

Then the total amount in the savings account will be,

`\begin{gathered} T=A+P \\ T=100+90 \\ T=190 \end{gathered}`

Hence, the total amount in the savings account is 190.