Question 1142568: trader needs ₦300,000 to improve her business, she deposits ₦110,000 in her savings account at 5% per annum compound interest. she then adds ₦50,000 to her savings at the end of each year.
a) Find her total savings after 3 years.
b) By how much is her savings greater or lesser than ₦300,000 at the end of the third year.
Found 2 solutions by ikleyn, MathTherapy:
Answer by ikleyn(52786)   (Show Source):
You can put this solution on YOUR website! .
Although the problem does not say directly and explicitly that the account is compound annually, I will assume
by default that it is so.
Her account works as if she has two saving plans for 3 years each:
- first plan is one-time deposit of ₦ 110000 at 5% APY interest compounded annually, and
- the second plan is the Ordinary annuity saving plan with annual deposits of ₦ 55000 at 5% APY interest compounded annually.
So, her total Future Value is the sum of the Future Values of both of these saving plans.
For the first plan, FV1 =  = 127338.75.
For the second plan, FV2 =  = 173387.50.
The total Future Value is FV = FV1 + FV2 = 127338.75 + 173387.50 = 300726.25.
ANSWER. The total future value is ₦ 300726.25, and it is ₦ 726.25 greater than ₦ 300000.
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On ordinary annuity saving plans, see my lessons
- Ordinary Annuity saving plans and geometric progressions
- Solved problems on Ordinary Annuity saving plans
in this site.
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Regarding the post by @MathTherapy, it is difficult to me to comment it, since the post does not contain NEITHER setup NOR calculations.
Answer by MathTherapy(10552)  (Show Source):
You can put this solution on YOUR website!
trader needs ₦300,000 to improve her business, she deposits ₦110,000 in her savings account at 5% per annum compound interest. she then adds ₦50,000 to her savings at the end of each year.
a) Find her total savings after 3 years.
b) By how much is her savings greater or lesser than ₦300,000 at the end of the third year.
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