Question

You deposit $10000 to open an investment account. The account will earn 8% interest. Two years after that deposit, you put $2500 in the account. Two years after that, you withdrawal $3000 from the account. How much money will be in the account at the end of year 6?

Answer 1

You deposit $10000 to open an investment account and the account earns 8℅ interest.

The formula of simple interest is: Amount(A) = P(1+rt) , where P is the principal amount=$10000, r is the rate of interest = 0.08 and t is the time period.

After 2 years, A = 10000(1+(0.08*2)) = $11600

You deposit $2500, and the total amount becomes $(11600+2500)= $14100, which works as principal for the next 2 years.

So, after another 2 years, A=14100[1+(0.08*2)] = $ 16356

Now, you withdraw $3000, and the amount becomes $(16356-3000)= $13356.

This is your principal for the last two years, which completes a total of 6 years.

So, after the last 2 years, A= 13356[1+(0.08*2)] = $15492.96

Answer- $15492.96