EduFarming
Your list · 0हिं

Type at least two letters. Press Esc to close.

↑↓ navigate↵ openTAB cycle filter

Perpetuity, Sinking Funds & Bonds · Question 20 of 63

How much of the van fund's ₹5,00,000 is interest?

Question 20

EasyOriginal question

A shop owner wants ₹5,00,000 in 4 years to buy a new delivery van. She puts an equal sum into a fund at the end of each year, earning 8% a year compounded yearly. (Take (1.08)4=1.36049(1.08)^{4} = 1.36049; answers to the nearest rupee.)

How much of the van fund's ₹5,00,000 is interest?

Options for question 20

Show the answer and explanation
CorrectNot quiteAnswer B

Correct answer: B

Explanation

  1. The deposits total ₹4,43,840.

  2. Interest =5,00,000−4,43,840=56,160= 5{,}00{,}000 - 4{,}43{,}840 = 56{,}160 rupees.

Worth noting

₹1,60,000 is 8% of ₹5,00,000 for 4 years, as if the whole sum were there from the start.

Concept
Interest earned by a sinking fund
Typical time
90 s
Your time
—
The rule this testsSinking funds
Practise this chapter →

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Practise this chapter →

Ten questions from Perpetuity, Sinking Funds & Bonds, at your own pace.

Practise this chapterAll 63 questions in Perpetuity, Sinking Funds & BondsRevise the notes for Perpetuity, Sinking Funds & Bonds