Morgana deposits £1000 into her bank account on the 1st of January every year with the first deposit being on 1st January 2016. The bank adds 3% interest to her deposit every 31st December. (a) Show that, after interest has been paid on 31st of December 2018, the balance in her account (assuming no withdrawals and no other deposits during this time) is 1000 × 1.033 + 1000 × 1.032 + 1000 × 1.03 (b) During which year (assuming that she continues in this fashion and her bank continues to pay 3%) will her balance exceed £50,000?
Morgana deposits £1000 into her bank account on the 1st of January every year with the first deposit being on 1st January 2016. The bank adds 3% interest to her deposit every 31st December. (a) Show that, after interest has been paid on 31st of December 2018, the balance in her account (assuming no withdrawals and no other deposits during this time) is 1000 × 1.033 + 1000 × 1.032 + 1000 × 1.03 (b) During which year (assuming that she continues in this fashion and her bank continues to pay 3%) will her balance exceed £50,000?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 36P
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Morgana deposits £1000 into her bank account on the 1st of January every year with the first deposit being on 1st January 2016. The bank adds 3% interest to her deposit every 31st December.
(a) Show that, after interest has been paid on 31st of December 2018, the balance in her account (assuming no withdrawals and no other deposits during this time) is 1000 × 1.033 + 1000 × 1.032 + 1000 × 1.03
(b) During which year (assuming that she continues in this fashion and her bank continues to pay 3%) will her balance exceed £50,000?
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