Bank

Mr. has deposited Birr 100,000 at Cooprative Bank of Oromia for ten yers. The bank pays annual interest of 7% which is compounded yearly. What amount of money will be in Bona’s account at the end of tenth year?

Solution

 To calculate the amount of money in Bona's account at the end of the tenth year, we can use the formula for compound interest:

A = P(1 + r/n)^(nt) Where:

A = the final amount of money

P = the principal amount (initial amount deposited) 

r = annual interest rate (expressed as a decimal)

n = number of times interest is compounded per year

t = number of years

Given values:

P = 100,000 birr 

r = 7% = 0.07

n = 1 (compounded yearly)

t = 10 years

 Plugging the values into the formula:

A = 100,000(1 + 0.07/1)^(1*10)

    = 100,000(1 + 0.07)^10

    = 100,000(1.07)^10

   ≈ 196,715.14 birr.

Therefore, the amount of money in Bona's account at the end of the tenth year will be approximately 196,715.