If we want ₹8,640 three years from now and the compounded interest rate is 20% p.a how much should we invest today? (assuming interest is compounded yearly)
Answer & explanation
Correct answer: option 4
The Formula that we used here is -
Amount = P$(1 \;+\; \frac{R}{100})^t$
8640 = P [ 1 + \(\frac{20}{100}\) ]³
8640 = P [ \(\frac{6}{5}\) ]³
8640 × \(\frac{5}{6}\) × \(\frac{5}{6}\) = P
P = 6000