A sum of ₹1,20,000 was invested in a fixed deposit in the year 2019 at the rate of 12% per annum compounding annually. What will its approximate value be in the year 2022 ?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e. ₹1,68,591.
C.I. = P(1 + R/100)T - P
where, C.I. = compound interest, P = Principal, R = Rate and T = Time
⇒ C.I. = 120000(1 + 12/100)3 - 120000
⇒ C.I. = 120000((1 + 3/25)3 - 1)
⇒ C.I. = 120000((28/25)3 - 1)
⇒ C.I. = 120000(21952 - 15625)/15625
⇒ C.I. = 120000 × 6327/15620
⇒ C.I. = 48591.36
Amount = Principal + Interest
Amount = 120000 + 48591.36 = Rs.168591