Question

If the interest rate is 10 percent and the present value of $100, what would be the paid out value in two years?

Answer 1

Paid out value `color(green)(A = $ 121)`

Explanation:

P = Principal = $100, Rate of Interest R = 10%, Period N = 2 years

Amount A at the end of the period of 2 years at 10% compound interest rate is

`A = P (1 + (R/100))^N`

`A = 100 (1 + (10/100))^2`

`A = 100 *( (cancel(110) 11)/ (cancel(100) 10))^2`

`A = cancel(100) * (121/cancel(100)) = color(green)($ 121)`