Question

You are going to deposit $18,000 today. You will earn an annual rate of 2.9 percent for 9 years, and then earn an annual rate of 2.3 percent for 12 years. How much will you have in your account in 21 years?

Answer 1

The solution to the question is given below :

Today's Deposit Amount = $ 18000

Annual Interest rate = 2.9 %

Period of deposit = 9 years

And nothing is given about the type of interest( Simple or compound) in the question :

So we Assume this is a Simple interest.,

Simple interest amount = S.I

Principal amount( Amount deposited today) = P

Interest rate = R

Time = T

S.I = P x R x t / 100

S.I = $18000 x 2.9/100 x 9

S.I = $ 4698

Amount of $ 4698 will be earned on the Principal amount or amount deposited today after completion of 9 years from now.

And , the deposit after 9 years in the bank account = $ 18000 + $4698 = $22,698

Now, the deposit of $ 22698 will earn 2.3 percent for 12 years from now(from the completion of 9th year and beginning of the 10th year ).

Now going to calculate the total amount including earnings after 21 years.

And now the principal amount changed to $ 22698

Simple interest amount = $ 22698 × 2.3 /100 × 12

Simple interest amount (after 12 years )= $ 6264.65

Total amount after 21 years in Bank account = Simple interest amount + principle Amount.

Total amount after 21 years in Bank = $ 6264.65 +$ 22698

Total amount after 21 years in Bank = $ 28962.65