Question

If $30,000 is deposited in a savings account at the end of each year and the account pays interest of 5% compounded annually, what will be the balance of the account at the end of 10 years

Answer 1

the balance of the account at the end of 10 years is $377,336.78

Step-by-step explanation:

The computation of the balance of the account at the end of 10 years is shown below;

Future value = PMT × [((1 + rate of interest)^time period - 1) ÷ rate of interest]

= $30,000 × [((1 + 0.05)^10 -1) ÷ 0.05]

= $30,000 [((1 + 0.62889 - 1) ÷ 0.05

= $30,000 × 12.5779

= $377,336.78

Hence, the balance of the account at the end of 10 years is $377,336.78