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If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)?
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If Rs. 10, 000 is invested at 8% per year compound quarterly then the ...
Investment Overview
To calculate the future value of an investment compounded quarterly, we use the compound interest formula:
Future Value (FV) = P(1 + r/n)^(nt)
Where:
- P = Principal amount (initial investment)
- r = annual interest rate (decimal)
- n = number of times interest is compounded per year
- t = number of years
Given Values
- Principal (P) = Rs. 10,000
- Annual interest rate (r) = 8% = 0.08 (as a decimal)
- Compounding frequency (n) = 4 (quarterly)
- Time period (t) = 2 years
Step-by-Step Calculation
1. Calculate r/n:
- r/n = 0.08/4 = 0.02
2. Calculate nt:
- nt = 4 * 2 = 8
3. Plug values into the formula:
- FV = 10,000 * (1 + 0.02)^8
4. Calculate (1 + 0.02)^8:
- Using the given value: (1 + 0.2)^1.171659
- (1.02)^8 = 1.171659
5. Final Calculation:
- FV = 10,000 * 1.171659 = Rs. 11,716.59
Conclusion
After 2 years, the investment of Rs. 10,000 at an 8% annual interest rate compounded quarterly will grow to approximately Rs. 11,716.59. This illustrates the power of compound interest, especially when compounded more frequently than annually.
To calculate the future value of an investment compounded quarterly, we use the compound interest formula:
Future Value (FV) = P(1 + r/n)^(nt)
Where:
- P = Principal amount (initial investment)
- r = annual interest rate (decimal)
- n = number of times interest is compounded per year
- t = number of years
Given Values
- Principal (P) = Rs. 10,000
- Annual interest rate (r) = 8% = 0.08 (as a decimal)
- Compounding frequency (n) = 4 (quarterly)
- Time period (t) = 2 years
Step-by-Step Calculation
1. Calculate r/n:
- r/n = 0.08/4 = 0.02
2. Calculate nt:
- nt = 4 * 2 = 8
3. Plug values into the formula:
- FV = 10,000 * (1 + 0.02)^8
4. Calculate (1 + 0.02)^8:
- Using the given value: (1 + 0.2)^1.171659
- (1.02)^8 = 1.171659
5. Final Calculation:
- FV = 10,000 * 1.171659 = Rs. 11,716.59
Conclusion
After 2 years, the investment of Rs. 10,000 at an 8% annual interest rate compounded quarterly will grow to approximately Rs. 11,716.59. This illustrates the power of compound interest, especially when compounded more frequently than annually.
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If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)?
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If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)?.
If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If Rs. 10, 000 is invested at 8% per year compound quarterly then the value of the investment after 2 year is: (given (1+0.2) 1.171659)?.
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