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June 2017 p11 q4
903
Each year a school allocates a sum of money for the library. The amount allocated each year increases by 2.5% of the amount allocated the previous year. In 2005 the school allocated $2000. Find the total amount allocated in the years 2005 to 2014 inclusive.
Solution
The problem describes a geometric series where the first term is the amount allocated in 2005, which is $2000, and the common ratio is the increase of 2.5% each year. Therefore, the common ratio is:
\(r = 1 + \frac{2.5}{100} = 1.025\)
The total amount allocated from 2005 to 2014 is the sum of the first 10 terms of this geometric series. The formula for the sum of the first \(n\) terms of a geometric series is:
\(S_n = a \frac{r^n - 1}{r - 1}\)
Substituting the known values \(a = 2000\), \(r = 1.025\), and \(n = 10\):