Question

If BNSF Railroad saves $100,000 in year one, $110,000 in year two, and amounts increasing by $10,000 each year for all five years, what is the annualized savings at an interest rate of 10%?

Answer 1

Answer:

$660,000

Explanation:

BNSF Railroad savings for each year with $10,000 increment for next five years is as shown;

Year 1: $100,000

Year 2: $110,000

Year 3: $120,000

Year 4: $130,000

Year 5: $140,000

Total saving after five years will be the summation of all the savings each year.

Annualized savings = $100,000+$110,000+$120,000+$130,000+$140,000

Annualized savings = $600,000

If there is 10% interest on the annualized savings;

Interest = 10% × $600,000

Interest = $60,000

Annualized savings at an interest rate of 10% = $600,000 + $60,000

= $660,000

Answer 2

Answer: annualized saving at the interest rate of 10% is $660,000

Explanation:

Savings ;

Yr 1 = $100,00

Yr 2 = $110,000

Yr 3 = $120,000

Yr 4 = $130,000

Yr 5 = $140,000

Total savings = $600,000

10% of total savings = 0.1 x $600,000 = $60,000

Annualised savings plus interest amounts to,

$600,000 + $60,000 = $660,000