What will Rs. $\mathbf{500}$ amounts to $\mathbf{10}$ years after its deposit in a bank which pays an annual interest rate of $\mathbf{10}%$ compounded annually?
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Ans:
The deposited amount to the bank is Rs. $500$.
The amount obtained after the end of the first year
$=$Rs. $500\left( 1+\dfrac{1}{10} \right)=Rs.\,500\left( 1.1 \right)$.
The amount obtained after the end of the second year,
$=Rs.\,500\left( 1.1 \right)\left( 1.1 \right)$.
The amount obtained after the end of third year,
$=Rs.\,500\left( 1.1 \right)\left( 1.1 \right)\left( 1.1 \right)$ and …so on
Therefore, after the end of $10$ years, the amount $=Rs.\,\,500\left( 1.1 \right)\left( 1.1 \right)...\left( 10\,\,\text{times} \right)$
$=Rs.\,\,500{{\left( 1.1 \right)}^{10}}$.