a person diposit birr 3000 at the end of the month for five yiars in to an account the pay 8% compound monthly after the five yiar the person liaves the account unteracted additional five yiars what is the balance offer 10 yiars
To calculate the balance after 10 years, we need to determine the total amount of interest earned over the first 5 years and then calculate the balance after another 5 years.
First, let's calculate the balance after 5 years:
Principal amount (initial deposit) = Birr 3000
Interest rate = 8% per month
Since the interest is compounded monthly, we need to convert the annual interest rate to a monthly rate:
Monthly interest rate = (1 + 8%)^(1/12) - 1 = 0.6414%
To calculate the total balance after 5 years, we use the compound interest formula:
Balance after 5 years = Principal amount * (1 + Monthly interest rate)^(Number of months)
Number of months = 5 years * 12 months/year = 60 months
Balance after 5 years = 3000 * (1 + 0.6414%)^(60)
Balance after 5 years = 3000 * (1.006414)^(60)
Balance after 5 years ≈ Birr 3830.097
After 5 years, the person leaves the account untouched for an additional 5 years. We can calculate the balance after another 5 years using the same formula, but this time the principal amount will be the balance after 5 years.
Principal amount = Birr 3830.097
Monthly interest rate = 0.6414%
Balance after 10 years = Principal amount * (1 + Monthly interest rate)^(Number of months)
Balance after 10 years ≈ 3830.097 * (1.006414)^(60)
Balance after 10 years ≈ Birr 4632.113
Therefore, the balance after 10 years would be approximately Birr 4632.113.