What sum of money will amount to Rs. 21296 in 3 years at 10% per annum, compounded annually?
Let sum = P
Interest rate = 10% per annum
Time = 3 years
Now,
Amount (A) = P (1 + R/100)n [Where, P = Present value
R = Annual interest rate
n = Time in years]
∴ A = P (1 + 10/100)3
⇒ 21296 = P (1 + 1/10)3
⇒ 21296 = P (11/10)3
⇒ 21296 = P × 1331/1000
⇒ P = 21296 × 1000/1331
⇒ P = 16 × 1000
⇒ P = 16000
∴ Sum = Rs.16000