#### Question

What will Rs 500 amounts to in 10 years after its deposit in a bank which pays annual interest rate of 10% compounded annually?

#### Solution

The amount deposited in the bank is Rs 500.

At the end of first year, amount = Rs 500(1 + 1/10)= Rs 500 (1.1)

At the end of 2^{nd} year, amount = Rs 500 (1.1) (1.1)

At the end of 3^{rd} 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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Solution What Will Rs 500 Amounts to in 10 Years After Its Deposit in a Bank Which Pays Annual Interest Rate of 10% Compounded Annually? Concept: Relationship Between A.M. and G.M..