FUTURE VALUE (F M)
This query is : Resolved
19 February 2011
CAN ANY ONE PLS EXPAIN ME HOW THIS FV IS CALCULATED AND HOW TO CALCULATE 4.046
PLS
Ram has deposited Rs. 55,650 in a bank, which is paying 15 per cent rate of
interest on a ten-year time deposit. Calculate the amount at the end of ten years?
Calculation of Future Value (FV)
FV = P CVF10,0.15
FV = 55,650 CVF10,0.15
(CVF of Re. 1 at 15 percent for 10 years is 4.046)
= 55,650 4.046
= Rs. 2,25,159.90.
PLS
Ram has deposited Rs. 55,650 in a bank, which is paying 15 per cent rate of
interest on a ten-year time deposit. Calculate the amount at the end of ten years?
Calculation of Future Value (FV)
FV = P CVF10,0.15
FV = 55,650 CVF10,0.15
(CVF of Re. 1 at 15 percent for 10 years is 4.046)
= 55,650 4.046
= Rs. 2,25,159.90.
CA PARAS BAFNA
(Expert)
20 February 2011
Future value after 10 years at 15% rate of interest means
1. On the deposited amount by Ram Bank will provide interest @ 15% annually.
2.After completion of 1 yr this amount will be compounded with 55650/ i.e. principal.
and it will be eligible for 2nd yr's Interest.
3. After completion of 2nd yr the same process will be repeated.
4. The formula for Amount(A) after n (10) years @ Compound Interest Rate i i.e.(15% =.15) is -
A=P(1+i)to the power n
= 55650(1+.15)to the power 10
So calculate 1.15x1.15x1.15 ten times.
You will get 4.046.
5. You may ask for Readymade tables in the exam.
1. On the deposited amount by Ram Bank will provide interest @ 15% annually.
2.After completion of 1 yr this amount will be compounded with 55650/ i.e. principal.
and it will be eligible for 2nd yr's Interest.
3. After completion of 2nd yr the same process will be repeated.
4. The formula for Amount(A) after n (10) years @ Compound Interest Rate i i.e.(15% =.15) is -
A=P(1+i)to the power n
= 55650(1+.15)to the power 10
So calculate 1.15x1.15x1.15 ten times.
You will get 4.046.
5. You may ask for Readymade tables in the exam.
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