Question

An amount of Rs. $20000$ is deposited in a bank for $2$ years and paying an annual interest rate of $5\%$, compounded yearly. Find the maturity value.

• A. $12050$
• B. $22050$
• C. $32050$
• D. $42050$

Answer 1

Answer: (B)

$22050$

Given, principal Amount (P) $=$ Rs. $20000$
Rate of Interest Amount (r) $=5\%=0.05$
Number of Period (t) $=2$ years
Compounded Interest (n) $=1$ (yearly)
Maturity value $=$ $P\times {(1+\frac{r}{n})}^{nt}$
$=$ $20000\times {(1+\frac{0.05}{1})}^2$
$=$ Rs. $22050$