Question

What will a deposit of Rs. $3,500$ at $10\%$ compounded monthly be worth if left in the bank for $5\frac{1}{2}$ years?

• A. $1552.45$
• B. $2552.45$
• C. $3552.45$
• D. $4552.45$

Answer 1

The correct option is B $2552.45$

We know the formula,
$A=P(1+\frac{r}{n}{)}^{n.t}$
Given, $P=$ Rs. $3500$, $r=10\%$ and $t=$ $5\frac{1}{2}$ years
Therefore, we have $A=3500{(1+\frac{0.1}{12})}^{12\times 5.5}$
$\Rightarrow A=3500\times {1.008}^{66}$
$\Rightarrow A=3500\times 1.72927$
$\Rightarrow A=6052.45$
To find interest we use formula $A=P+I$, since $A=6052.45$ and $P=3500$, we have:
$A=P+I$
$\Rightarrow 6052.45=3500+I$
$\Rightarrow I=6052.45-3500=2552.45$
Interest, $I=$ Rs. $2552.45$