A savings scheme pays 5% per annum compound interest. A deposit of £100 is invested in this scheme at the start of each year.
a) Show that at the start of the third year, after the annual deposit has been made, the amount in the scheme is £315.25.
b) Find the amount in the scheme at the start of the fortieth year, after the annual deposit has been made.
Please show me how to do it...
For a) I did 100*1.05^3 + 200 but that doesn't give the answer I should get...
Thanks!
a) Show that at the start of the third year, after the annual deposit has been made, the amount in the scheme is £315.25.
b) Find the amount in the scheme at the start of the fortieth year, after the annual deposit has been made.
Please show me how to do it...
For a) I did 100*1.05^3 + 200 but that doesn't give the answer I should get...
Thanks!
-
You want:
100*(1.05^2)+100*(1.05) + 100 = 315.25
100*(1.05^2)+100*(1.05) + 100 = 315.25