Question 13 Marks
Three years ago, Beeru purchased a buffalo from Surjeet for Rs. 11000. What payment will discharge his debt now, the rate of interest being 10% per annum, compounded annually?
Answer
View full question & answer→Price of a buffalo (P) = Rs. 11000
Rate of interest (r) = 8% p.a
Period (n) = 3 years
Price of buffalo at present
(A) $=\Big(1+\frac{\text{R}}{100}\Big)^{\text{n}}$
$=\text{Rs. }11000\times\Big(1+\frac{10}{100}\Big)^3$
$=\text{Rs. }11000\times\Big(\frac{11}{10}\Big)^3$
$=\text{Rs. }11000\times\frac{11}{10}\times\frac{11}{10}\times\frac{11}{10}$
$=\text{Rs. }14641$
Rate of interest (r) = 8% p.a
Period (n) = 3 years
Price of buffalo at present
(A) $=\Big(1+\frac{\text{R}}{100}\Big)^{\text{n}}$
$=\text{Rs. }11000\times\Big(1+\frac{10}{100}\Big)^3$
$=\text{Rs. }11000\times\Big(\frac{11}{10}\Big)^3$
$=\text{Rs. }11000\times\frac{11}{10}\times\frac{11}{10}\times\frac{11}{10}$
$=\text{Rs. }14641$