How much ?

[droopydrawers]

WILL £10000 @ 5% PER ANUM BE WORTH IN 5 YEARS.THE INTEREST IS COMPOUNDED YEAR ON YEAR

Many thsnks my old brain doesn't do figures these days,

DD

[Ellipsis]

The formula is simply

10000 x 1.05^5

or, in words, ten thousand times one point oh five to the power five

where 10000 is the sum invested
1.05 is 1 plus the interest rate (5% = 5 per 100 = 5/100 = 0.05)
5 is the number of years

1.05 to the power 5 is 1.05 multiplied by itself 5 times in total, in other words 1.05 x 1.05 x 1.05 x 1.05 x 1.05

In Excel the formula is

=10000*POWER(1.05,5)

On a scientific calculator you would press these keys:

10000 x 1.05 yx 5 =

where "yx" is a key with a big y and a little x next to and higher than the y

On a simple calculator you would have to do this:

10000 x 1.05 x 1.05 x 1.05 x 1.05 x 1.05 =

These all give the answer: £12762.82 (rounded to the nearest penny)

If tax is due then the net interest rate is 4%, so the formula becomes

10000 x 1.04^5

Giving: £12166.53

[factor-fiction]

That's right Ellipsis- we actually used that formula on Wednesday (see my unwieldy Google link, for example) but then reverted to a step by step calculation so droopydrawers could follow what was happening.

I used to be able to show powers of 5 on here but i seem to have lost the facility

[factor-fiction]

I can still do cubes (1.05³) but can't remember how to do higher powers including n- can anyone remind me how to do it please?

[Sipowicz]

Or, you got to year 2, then lost interest?

[gollob]

there are loads of places where you can get 5% or even more. It's all according to how much risk you want to take