A person invests Rs.3,000 in a three years’ investment that pays you 12% per annum. Calculate the future value of the investment.?

Question

Answer

Calculation of Future Value of Investment

Formula for calculating the future value of an investment is:

Future Value = Present Value x (1 + Interest Rate) ^ Number of Years

Calculation using the Formula

Given, Present Value = Rs.3,000, Interest Rate = 12% per annum, Number of Years = 3

Future Value = Rs.3,000 x (1 + 0.12) ^ 3

Future Value = Rs.3,000 x 1.404928

Future Value = Rs.4,214.78 (approx.)

Explanation

Future value of an investment is the amount of money that an investment will grow to at some point in the future. It takes into account the initial investment, the interest rate, and the number of years. In this case, the person has invested Rs.3,000 at an interest rate of 12% per annum for 3 years. Using the formula for future value, we can calculate that the investment will be worth approximately Rs.4,214.78 after 3 years.

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