Bank of Wahapur offers an interest of 5% p.a. Compare how much one gets if one deposits ₹ 20,000 for a period Class 8
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Bank of Wahapur offers an interest of 5% p.a. Compare how much one gets if one deposits ₹ 20,000 for a period Class 8
Question 1.
Bank of Wahapur offers an interest of 5% p.a. Compare how much one gets if one deposits ₹ 20,000 for a period of 4 years with compounding and without compounding annually. Class 8
Solution:
Without compounding
Amount to be received
= ₹ 20000 (1 + 4 × 0.05)
= ₹ 20000 (1 + 0.2)
= ₹ 20000 × 1.2
= ₹ 24000.
With compounding
Amount received
= ₹ 20000 [latex]\left(1+\frac{5}{100}\right)^4[/latex]
= ₹ 20000 × 1.05 × 1.05 × 1.05 × 1.05
= ₹ 24310 (approx.)
Question 2.
Do you observe anything interesting in the solutions of the two questions above? Share and discuss. Class 8
Solution:
Yes. Amount is more in case of with compounding.
Note : Do as directed.