Each year a company gives a grant to a charity. The amount given each year increases by of its value in the preceding year. The grant in 2001 was . Find:
(i) the grant given in 2011,
(ii) the total amount of money given to the charity during the years 2001 to 2011 inclusive.
I don't think that is possible ! How can I solve this question?
r is not 5%, but 1.05, because you keep the previous amount.
Let's take an example :
The first year, they give 5000$.
The following year, they will give 5000 increased of 5%.
This means that they will give 5000+5%*5000=5000+.05*5000=5000*1.05
The following year, they will give 5000*1.05 added up by 5%.
This means that they will give 5000*1.05+5%*(5000*1.05)=(5000*1.05)*1.05=5000*1.0 5²
Is it clear for you now ?