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June 2006 p1 q3
936
Each year a company gives a grant to a charity. The amount given each year increases by 5% of its value in the preceding year. The grant in 2001 was $5000. Find
(i) the grant given in 2011,
(ii) the total amount of money given to the charity during the years 2001 to 2011 inclusive.
Solution
Given that the grant increases by 5% each year, this forms a geometric progression (GP) with the first term, \(a = 5000\), and common ratio, \(r = 1.05\).
(i) To find the grant given in 2011, we calculate the 11th term of the GP:
\(a r^{n-1} = 5000 \times 1.05^{10}\)
\(= 5000 \times 1.62889 \approx 8144\)
(ii) To find the total amount given from 2001 to 2011, we use the sum formula for a GP: