Question

Leila aspires to buy a car worth Rs. 10,00,000 after 5 years. What is the minimum amount in Rupees that she should deposit now in a bank which offers $10\%$ annual rate of interest. If the interest was compounded annually ?

• A.
  $5,00,000$
• B.
  $6,21,000$
• C.
  $6,66,667$
• D.
  $7,50,000$

Answer 1

The correct option is B

$6,21,000$
$A=P{(1+\frac{r}{10})}^{n}1000000=P{(1+\frac{10}{100})}^{5}1000000=P{\left(\frac{11}{10}\right)}^{5}1000000=P\left(\frac{{11}^5}{{10}^5}\right)P=1000000\times \frac{{10}^5}{{11}^5}=\frac{{10}^6\times {10}^5}{{11}^5}=620921.323=621000$