You are investing AU10771 today in bank account which offers a fixed interest ra

Question

You are investing AU10771 today in bank account which offers a fixed interest rate of 1.06%/quarter. You plan to withdraw AU10,000 from the bank account exactly at the end of five (5) years from today and keep the remaining amount in the same bank account for another five (5) years.
What will be the balance in the account after ten (10) years from today? You are investing AU10771 today in bank account which offers a fixed interest rate of 1.06%/quarter. You plan to withdraw AU10,000 from the bank account exactly at the end of five (5) years from today and keep the remaining amount in the same bank account for another five (5) years.
What will be the balance in the account after ten (10) years from today? You are investing AU10771 today in bank account which offers a fixed interest rate of 1.06%/quarter. You plan to withdraw AU10,000 from the bank account exactly at the end of five (5) years from today and keep the remaining amount in the same bank account for another five (5) years.
What will be the balance in the account after ten (10) years from today?

Explanation / Answer

Quarterly interest rate = 1.06%

Withdrawal after 5 years (20 quarters) = AU10000

Time to keep AU 10771 = 20 quarters

So,

Balance in account after 10 years = (10771*(1+1.06%)^20 - 10000)*(1+1.06%)^20

Balance in account after 10 years = AU 4074.37

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