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Arithmetic or Geometric











































Calculate future value of cash deposited in a savings account.

   • Deposit: $500

   • Interest: 5% annual interest

   • Compounding: yearly

   • No further deposits and no withdrawals


Assuming the interest rate does not change, how much money will be in the savings account at the end of the tenth year?

Comments for Arithmetic or Geometric

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Jun 21, 2011
Arithmetic or Geometric
by: Staff

The question:

A person deposited $500 in a savings account that pays 5% annual interest that is compounded yearly. At the end of 10 years, how much money will be in the savings account.


The answer:


A compound interest calculation is a geometric series because there is a constant ratio between successive terms.


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