Question

What sum of money will amount to ₹ 3515.20 in 3 years at 4% per annum compounded yearly?

Answer 1

Step 1: Write down the compound interest formula.

The formula for the final amount (A) in a compound interest problem is given by:

A = P(1 + r)^t

where P is the principal sum, r is the annual interest rate and t is the time in years.

Step 2: Substitute the given values into the formula.

We are given:

• A = 3515.20
• t = 3 years
• r = 4% = 0.04

We need to find the principal sum, P.

The equation becomes 3515.20 = P(1 + 0.04)³

Step 3: Solve for the principal sum, P.

3515.20 = P(1.04)³

3515.20 = P(1.124864)

`P = 3515.20/1.124864`

P = 3125