If we want ₹8,640 three years from now and the compounded interest rate is 20% p.a how much should we invest today? (assuming interest is compounded yearly)
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. ₹5,000.
A = p(1 + r/100)n
8640 = p (1 + 20/100)3
8640 = p(216/125)
p = 5000