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Question
A man deposits Rs 200 at the end of each year in a recurring account at 5% compound interest. How much will it become at the end of 3 years?
Solution
At end of 1st year, 2nd year, and 3rd year ₹ 200 were deposited.
Rate of interest R = 5% p.a.
At end of 3 years, amount
= `200 + 200[1 + 5/100] + 200[1 + 5/100]^2`
= `200[1 + 1.05 + (1.05)^2]`
= 200[2.05 + 1.1025]
= 200 [3.1525] = 630.5
At end of 3 years, the account will have a balance of ₹ 630.5.
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