Question

Calculate the future value of 1,00,000 at the end of 3 year at 12% when the compounded on a) Yearly basis b) Quarterly basis​

Answer 1

Answer:

1,00,000 at the end of 3 year at 12% when the compounded on

a) Yearly basis

A= $140,492.80

A = P + I where

P (principal) = $100,000.00

I (interest) = $40,492.80

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 12/100

r = 0.12 rate per year,

Then solve the equation for A

A = P(1 + r/n)^nt

A = 100,000.00(1 + 0.12/1)^(1)(3)

A = 100,000.00(1 + 0.12)^(3)

A = $140,492.80

b) Quarterly basis

A = $142,576.09

A = P + I where

P (principal) = $100,000.00

I (interest) = $42,576.09

Calculation Steps:

First, convert R as a percent to r as a decimal

r = R/100

r = 12/100

r = 0.12 rate per year,

Then solve the equation for A

A = P(1 + r/n)^nt

A = 100,000.00(1 + 0.12/4)^(4)(3)

A = 100,000.00(1 + 0.03)^(12)

A = $142,576.09