Question

PLO - 1 How much you deposit in an account earning 12% profit per year if you would like to have Rs.150,000 in the account after 10 years. 4

solve question 3

Answer 1

Given, interest rate, r = 12% per annum

Future value, F = Rs. 150,000

Time, n = 10 years

Let the amount to be deposited be P

The problem can be written mathematically as follows

$\large P = \frac{F}{(1+r)^n}$

$\large P = \frac{150,000}{(1+0.12)^{10}}$

$\large P = \frac{150,000}{1.12^{10}}$

$\large P = {150,000}*{0.321973}$

P = Rs. 48,295.98

So we are required to deposit Rs. 48,296 (Approximately) today ,at a rate of 12% per annum, in order to have Rs. 150,000 after 10 years.

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