Multiple choice

Rahul's annual starting salary is Rs. 2,40,000 and it increases by 20% each year. At the beginning of each year, he immediately invests 25% of that year's salary into the Future Wealth Scheme, which compounds annually at 15%. He makes one such beginning-of-year contribution in each of the first three years and leaves all contributions invested throughout. What is the total interest earned from the scheme by the end of the third year?

  1. Rs. 57,432.50

  2. Rs. 67,423.50

  3. Rs. 67,432.50

  4. Rs. 76,423.50
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Calculate the contribution for each year: Year 1: 60,000, Year 2: 72,000, Year 3: 86,400. Calculate the future value of each contribution after 3, 2, and 1 years respectively using compound interest formula A = P(1+r)^n. The total interest is the total future value minus the sum of contributions (218,400).

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