Question

You have invested Rs 100 for 4 years at an annual rate of 12 percent, compounded monthly. What is the future value of the investment at the end of the fourth year?

Answer 1

Answer:

Future Value = ₹ 161.22

Step-by-step explanation:

One time investment = ₹ 100

Time = 4 years

Annual interest rate = 12% compounded monthly.

First of all calculate the effective rate

$i = {(1 + \frac{0.12}{12}) }^{12} - 1 = 0.1268$

Effective rate of interest = 12.68% per annum

Now, calculating the Future value

FV = ₹ 100 (F/P,12.68%,4)

$fv = 100 \times {1.1268}^{4} = 161.22$