What will be the future value of Rs. 100,000 invested for two years at an annual compound interest rate of 10%?
Correct answer: C. Rs. 121,000
- A. Rs. 110,000
- B. Rs. 120,000
- C. Rs. 121,000
- D. Rs. 125,000
Explanation
The future value is calculated as Rs. 100,000 multiplied by 1.10 squared. This produces Rs. 121,000, because interest is compounded in both years.
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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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