Question #249802

A person gifted Rs. 2500 to his two children aged 10 years and 15 years respectively with the condition that the sum should be divided in such a way that the two children got the same amount when they reached the age of 30 years. Assuming that the rate of compound interest charged is 5% p.a., what is the value of gift received by each child?


1
Expert's answer
2021-10-12T07:25:15-0400

Use the Compound Interest Formula


A=P(1+rn)ntA=P(1+\dfrac{r}{n})^{nt}

Given r=0.05,n=1r=0.05, n=1


P1(1+0.051)1(3010)=P2(1+0.051)1(3015)P_1(1+\dfrac{0.05}{1})^{1(30-10)}=P_2(1+\dfrac{0.05}{1})^{1(30-15)}

P2=P1(1.05)5P_2=P_1(1.05)^5

P1+P2=2500P_1+P_2=2500

Substitute


P1+P1(1.05)5=2500P_1+P_1(1.05)^5=2500

P1=25001+(1.05)5P_1=\dfrac{2500}{1+(1.05)^5}

P1=25001+(1.05)5P_1=\dfrac{2500}{1+(1.05)^5}

P1=1098.28P_1=1098.28

P2=1401.72P_2=1401.72

The children aged 10 years receives Rs.1098.28 and the children aged 15 years receives Rs.1401.72.



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