Answer:
Total amount = $111377.26
Step-by-step explanation:
It's a repeating formula.
Step 1: Get the interest rate percentage (12.5% or 0.125 in decimals) of the invested amount (50,000)
You can do this by multiplying 50,000 by 0.125
The answer is $6250.
Step 2: Add the previous years' investment to the current interest of the year now, and that will be the amount for a year.
We're going to use the second year here. So:
1st year = $6250
2nd year = 12.5% of 56,250(50,000+6250) = 7031.25
3rd year = 12.5% of [(7031.25 + 56,250) = 63281.25] = 7910.15
4th year =12.5% of [(7910.15 + 63281.25) = 71191.4 ] = 7910.15
And so on and so on.
Step 3: When you're done with all of them, add them all up. And that's the total amount.
5th year = 10011.29
6th year = 11262.70
7th year = 12670.54
8th year = 14254.36
9th year = 16036.15
10th year = 18040.67
Total amount = $111377.26
