Question

What sum of money will amount to Rs. 21296 in 3 years at 10% per annum, compounded annually?

Answer 1

Let sum = P 

Interest rate = 10% per annum 

Time = 3 years 

Now, 

Amount (A) = P (1 + R/100)ⁿ [Where, P = Present value 

R = Annual interest rate 

n = Time in years] 

∴ A = P (1 + 10/100)³ 

⇒ 21296 = P (1 + 1/10)³ 

⇒ 21296 = P (11/10)³ 

⇒ 21296 = P × 1331/1000 

⇒ P = 21296 × 1000/1331 

⇒ P = 16 × 1000 

⇒ P = 16000 

∴ Sum = Rs.16000