Question

A person wants to create an endowment fund to provide for a prize of Rs.300 every year. If the fund can be invested at 4% per annum, find the value of the endowment.

Answer 1

value of endowment is Rs75oo

Answer 2

Answer:

Rs 7500

Step-by-step explanation:

A person wants to create an endowment fund for providing Rs 300 as prize every year.

The rate of interest would be 4% per annum .

Therefore we can consider Rs 300 as the Simple interest for a year.

We basically have to find out the principle money which would be invested.

So, according to the formula of Simple Interest,

S.I= (p * r * t)/100   [ p= principle money, r= rate of interest per annum, t= time]

300= (p * 4 * 1)/100

300= 4p/100

4p= 300 *100

 p=  (300 * 100)/4

 p= 7500

Therefore the principle money which would  be required to create the endowment fund is Rs 7500.