Question

John starts a savings account by depositing $1,000 today and then increases the deposit by $50 each year until Year 20. If the bank pays an interest of 12% per year compounded yearly, what is the account balance at the end of 25 years?

Answer 1

we had the initial deposit of $1000 and we increased the deposit by $50 each year for 20 years

so for the first 20 years we had calculated the based on simple interest ( P*R*T / 100)for each year and then the amount after 20 years is $13284.94

Balance after 5 years is calculated on the basis of compound interest P*(1+r/100)^n so the total amount is $23381.49 (approx)