Question

You deposit $1,000 for years at an interest rate of 2.0%.If the interest is compounded guardedly.How much money would you have at the end of four years in this situation?

Answer 1

Principle(P)=$1000
Rate (r)=2%=0.02
Time=t=4 years
n=no of times the interest is compounded per year=4
Amount (A)=?
Then,
A=P{(1+r/n)}^(n×t)
=1000{1+0.02/4}^(4×4)
=1000×(1.005^16)
=1000 × 1.08307115
=1083.07115
=1083.07 (approx)

Thus at the end of 4 years the amount of money will be Rs 1083.070 approximately.

Hope this helps....