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Q

A man saves Rs.20000 at the beginning of each year and puts the money in a bank that pays 5% interest per year, interest being compounded annually. How much would be the total savings of the man at the end of 5 years?

(Given that (1.05)5 = 1.276)

• Option 1)

Rs. 115920

• Option 2)

Rs.125570

• Option 3)

Rs.140460

• Option 4)

Rs.134460

• Option 5)

None of these

Answers (1)
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P= 20,000 t = 5 years , R = 5 %

So the present value

$\left [ 20000+\frac{20000}{1.05}+\frac{20000}{1.05\times 1.05}+\frac{20000}{1.05\times 1.05\times 1.05} \right ]$

Let this be  by Pv

Desired answer = future value ( at the end of 5 years )

Pv (1+5 % ) 5

Pv (1.05)5

Pv x 1.276

= 115920 Rs.

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