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Perpetuity, Sinking Funds & Bonds · Question 32 of 63

How much is in the van fund just after the second deposit?

Question 32

HardOriginal 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 is in the van fund just after the second deposit?

Options for question 32

Show the answer and explanation
CorrectNot quiteAnswer D

Correct answer: D

Explanation

  1. The first deposit has earned one year's interest; the second has just gone in.

  2. 1,10,960×1.08+1,10,960=1,10,960×2.08≈2,30,7971{,}10{,}960 \times 1.08 + 1{,}10{,}960 = 1{,}10{,}960 \times 2.08 \approx 2{,}30{,}797 rupees.

Worth noting

₹2,21,920 gives the first deposit no interest.

Concept
A fund's balance part-way
Typical time
150 s
Your time
—
The rule this testsSinking funds
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