If A person invests Rs 3000 in three years invesment that pays you 12% per annum. calculate the future value of the investment.
Answers
If A person invests Rs 3000 in three years invesment that pays you 12% per annum. The future value of the investment will be Rs. 4080
Step-by-step explanation:
Given that,
Principal (P) = Rs. 3000
Time (t) = 3 years
Rate of interest (r) = 12% p.a.
Then using the relation [ I = Ptr/100 ], where I is the interest for the sum P at the rate of r% p.a. for t years, we get
I = Rs. (3000 × 3 × 12)/100
= Rs. 1080
Therefore the future value of the investment becomes
= Rs. (3000 + 1080)
= Rs. 4080
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Answer:
Depending on the accumulation formula you choose the future value can be:
Simple = 4080 rupees
Compound = 4214.78 rupees
Step-by-step explanation:
We can work out the future value using 2 formulas:
1) Simple interest method if the interest doesn't earn interest.
2) Compound interest if the amount is compounded annually.
Let's take the first case.
We have : S.I = Principle × rate × time
= 3000 × 3 × 12/100 = 1080
The future value of the investment is therefore = 3000 + 1080 = Rs 4080
Case two: Using compound interest accumulation
Future value = Principle × (1 + i)³
Doing the substitution we have:
= 3000 × (1.12)³ = Rs 4214.78