Question:
What will Rs. 1000 be worth after three years if it earns interest at the rate of 5\(\%\) compounded annually?
What will Rs. 1000 be worth after three years if it earns interest at the rate of 5\(\%\) compounded annually?
Updated On: Sep 25, 2024
- 1057
- 1257
- 1157
- 1300
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The Correct Option is C
Solution and Explanation
The correct option is (C): 1157
Explanation:Explanation: To find the future value of Rs. 1000 after three years with an annual compound interest rate of 5%, we can use the formula:
\[A = P(1 + r)^n\]
where:
- \( A \) is the amount of money accumulated after n years, including interest.
- \( P \) is the principal amount (Rs. 1000).
- \( r \) is the annual interest rate (5% or 0.05).
- \( n \) is the number of years (3).
Substituting the values:
\[A = 1000(1 + 0.05)^3 = 1000(1.05)^3 \approx 1000 \times 1.157625 \approx 1157.6\]
Thus, rounding to the nearest whole number, the value is approximately Rs. 1158.
So, the answer is Option C : 1157.
Explanation:Explanation: To find the future value of Rs. 1000 after three years with an annual compound interest rate of 5%, we can use the formula:
\[A = P(1 + r)^n\]
where:
- \( A \) is the amount of money accumulated after n years, including interest.
- \( P \) is the principal amount (Rs. 1000).
- \( r \) is the annual interest rate (5% or 0.05).
- \( n \) is the number of years (3).
Substituting the values:
\[A = 1000(1 + 0.05)^3 = 1000(1.05)^3 \approx 1000 \times 1.157625 \approx 1157.6\]
Thus, rounding to the nearest whole number, the value is approximately Rs. 1158.
So, the answer is Option C : 1157.
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