A spreadsheet is used to compute the balance of a savings account that starts with an initial deposit of $\text{₦}10{,}000$. No further deposits are made. The annual interest rates applied at the end of each year are:

- Year 1: 5 %
- Year 2: 4.5 %
- Year 3: 4 %
- Year 4: 3.5 %
- Year 5: 3 %

The balance for each year is calculated by multiplying the previous year's balance by $1 +$ the year's rate. (a) Compute the balance at the end of each year. (b) State in which year the balance first exceeds $\text{₦}12{,}000$ and give the balance at the end of that year (rounded to two decimal places).

Question

A spreadsheet is used to compute the balance of a savings account that starts with an initial deposit of $\text{₦}10{,}000$. No further deposits are made. The annual interest rates applied at the end of each year are:

- Year 1: 5 %
- Year 2: 4.5 %
- Year 3: 4 %
- Year 4: 3.5 %
- Year 5: 3 %

The balance for each year is calculated by multiplying the previous year's balance by $1 +$ the year's rate. (a) Compute the balance at the end of each year. (b) State in which year the balance first exceeds $\text{₦}12{,}000$ and give the balance at the end of that year (rounded to two decimal places).

Accepted Answer

Year 5; balance = ₦12,165.12

Neco 2022 Data Processing Question 40

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