# Compounding Interest

1.a A person is going to make deposits in an account as follows:

the 1st. deposit will be for $10 and deposits will keep on increasing by $5 each

year for 50 years.

i.e. 1st. deposit will be $10

2nd. deposit will be $15

3rd. deposit will be $20

and so on. (remember there are 50 deposits)

If the rate of interest is 10% find the present value and the future valu of

these deposits.

1.b what will be the Present Value of the deposits in problem 1, if the deposits are going to continue forever.

2. You make deposits of $2 each year for 30 years. the rate of interest that will prevailis 10% for the first 20 years and the 12% for the remaining period. If the interest rate is compounded continuously, what is the present and future value of these deposits.

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#### Solution Summary

Compound interest is discussed.