Question

Three years ago, Beeru purchased a buffalo from Surjeet for ₹ 11000. What payment

Will discharge his debt now, the rate of interest being 10% per annum, compounded annually?

Answer 1

Given:

Present value= ₹ 11000

Interest rate= 10% per annum

Time=3 years

To find the amount we have the formula,

Amount (A) = P (1+(R/100))ⁿ

Where P is present value, r is rate of interest, n is time in years.

Now substituting the values in above formula we get,

∴ A = 11000 (1 + 10/100)³

⇒ A = 11000 (11/10)³

⇒ A = 11000 (1331/1000)

⇒ A = 11 (1331)

⇒ A = ₹ 14614

∴ Beeru has to pay ₹ 14614