If you plan to save Rs. 5,000 with a bank at an interest rate of 8%, what will be the worth of your amount after 4 years if interest is compounded annually?
Correct answer: D. Rs. 6,802Accounting & Auditing
- A. Rs. 5,400
- B. Rs. 5,900
- C. Rs. 6,600
- D. Rs. 6,802Accounting & Auditing
Explanation
With annual compounding, future value is Rs. 5,000 × (1.08)^4, which is approximately Rs. 6,802. Simple interest would produce a smaller amount, so compounding is essential here.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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