How to calculate the compound interest for £100 ,for 10 years,5% interst and each year add £50 to the £100.?

Question

how to calculate compound interst for £100 ,for 10 years,5% interst per year and each year i would like to add £50 to the capital

I am looking for the formula.

Answer 1

Check out the link I provided, it explains how to calculate compound interest and also provides several links for compound interest calculators.

Answer 2

I always SPREADSHEET it .. that way, you know you have got it right AND you can vary the figures to see what the effect is ..

In this case it's almost trivial ...

You say 5% a year ... in which case, after 1 year you will have £105 (i.e. £100 plus 5% of 100 (=£5)).

After adding another £50 you will have £155 at the start of year 2.

End of yr 2, £155 + 5% = £162.75, add 50 = £212.75
End of yr 3, £212.75 + 5% = £223.3875, add 50 =£273.3875
and so on ....

End of year 10 (including a final 'add £50') I make it £791.78


What if Interest was paid monthly ?
Well 5% a year is 5/12 = 0.4166r% per month.
At the end of month 1, adding Interest makes you £100 = £100.4167 ...
In the second month you get Interest on the Interest making £100.8351 ... this conmtinues untill the end of year, after 12 months, when you end up with £105.12p i.e. 12p more than the simple '5% Interest a year' would have given you.

Do this for 10 years (240 months) including the extra 50 every 12th month and you end up with .....£797.02

... so, over 10 years, getting Interest monthly (instead of yearly) means an extra £5.23p ..