6. If a company sets aside $1,000,000 now into a contingency fund, how much will the company have in 2 years, if it doe...
6. If a company sets aside $1,000,000 now into a contingency fund, how much will the company have in 2 years, if it does not use any of the money and the account grows at a rate of 10% per year Compounded ?
Homework Answers
Answer : Here
Principal (P) = $1,000,000
Rate of interest (r) = 10% = 0.1
Time (t) = 2 years
n = Per year interest rate compounding time = 1
Now,
Amount = P (1 + r/n)^nt
=> Amount = 1,000,000 (1 + 0.1/1)^(1*2)
=> Amount = 1,000,000 (1.1)^2
=> Amount = 1,000,000 * 1.21
=> Amount = $1,210,000
Therefore, in 2 years the company will have $1,210,000.
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