Question 1
A village estimates N1,049,740.00 for a water project. The sum of N400,00.00 is realized through communal donation and deposited in a bank at a compound interest of 10% per annum. If the village chief adds N100,000.00 to the amount in the account at the end of each year, how long will it take to realize the estimate?
Observation
The Chief Examiner reported thata good number of candidates were able to interpret the question correctly because most candidates used the compound interest formula directly to solve.
They were expected to solve as shown:
Amount at the end of year 1
= 110/100 * ₦440,000.00. The new amount becomes
440,000+ 100,000= ₦540,000.00.
Amount at the end of year 2 =
110/100 * ₦594,000.00. The new amount becomes 594,000 + 100,000= ₦694,000.00.
Amount at the end of year 3 =
110/100 * ₦763,400.00.The new amount
= 763,400 + 100,000
= ₦863,400.00.
Amount at the end of year 4 is
110/100 * 863,400 = ₦949,740.00. The new amount
= 949,740 + 100,000
= ₦1,049,740.00. Therefore, it takes 4 years.