Question

If you wish to withdraw Rs. 50000, Rs 80,000, Rs. 110000 and Rs. 140000 at the end of 2nd, 3rd, 4th and 5th year from now from a savings accounts which earns 8% interest rate compounded annually, the amount you should deposit now is

Answer 1

$A=P(1+r/n)^(nt)$

To withdraw Rs. 50,000 at the end of 2nd year

$50,000=P(1+0.08)^2$

$50,000=1.1664P$

$P=50,000÷1.1664$

$P=Rs. 42,866.94$

To withdraw Rs. 80,000 at the end of 3 years

$80,000=P(1+0.08)^3$

$P=80,000÷(1.08)^3$

$P=Rs.63,506.58$

To withdraw Rs. 110,000 at the end of 4 years

$P=110,000÷(1.08)^4$

$P=Rs.80,853.28$

To withdraw Rs. 140,000 at the end of 5 yearsyears

$P=140,000÷(1.08)^5$

$P=Rs.95, 281.65$