A man invests Rs. 6500 for 3 years at 4.5% p.a. compound interest,
compounded annually. 20% is deducted at the end of each year from
this investment for expenditures. Find the amount due at the end of the
third year.
a.
Rs. 3688.24
b.
Rs. 4946.62
C.
Rs. 3797.80
d.
Rs. 5244.04
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Answer:
C. 3797.80
Step-by-step explanation:
A = P x (1 + r)^t
Year 1: Amount = 6500(1+0.045)^1 = 6792.50
Deduction of 20% means 80% remaining
End of year 1 amount = 6792.5 x 0.8 = 5434
Use this as Principal of year 2:
End of year 2 amount = 5434 x 1.045 x 0.8 = 4542.82
and so on:
End of year 3 amount = 4542.82 x 1.045 x 0.8 = 3797.80
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