Multiple choice

Ravi wants to invest Rs. 20,000 in a scheme for 3 years. At the end of 3 years, he is expected to receive Rs. 32,000. The current rate of interest available in the market for 3 years is 10% per annum compounded annually. Decide whether Ravi should go in for the investment or not. If he goes for the investment, what will be his loss/profit?

  1. No, Rs. 6,000 loss

  2. Yes, Rs. 5,380 profit

  3. No, Rs. 5,000 loss

  4. Yes, Rs. 7,000 profit
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Future value of 20,000 at 10% compound interest for 3 years is 20000 * (1.1)^3 = 20000 * 1.331 = 26,620. Ravi expects 32,000. Profit = 32,000 - 26,620 = 5,380.

AI explanation

Using the compound interest formula, the maturity amount in the market is 20000 multiplied by 1.10 cubed, which equals 26620. If he chooses the market scheme, he would get Rs. 26,620, but the proposed scheme offers Rs. 32,000, so he should invest. His profit compared to the market scheme is 32000 minus 26620, resulting in a profit of Rs. 5,380.

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