Question
A person invests ₹80,000 in a mutual fund. The
investment grows at a rate of 8% per annum, compounded annually. After 3 years, he decides to withdraw ₹10,000 and reinvest the remaining amount at the same rate. After another 2 years, the remaining amount grows at the same rate, and he sells the entire amount. What is the total amount he receives after 5 years?Solution
Initial investment = ₹80,000. Rate = 8% per annum, compounded annually. Amount after 3 years: A = P(1 + r/n)^(nt) = ₹80,000(1 + 0.08)^3 = ₹80,000 × 1.2597 = ₹1,00,776. Amount remaining after withdrawing ₹10,000 = ₹1,00,776 - ₹10,000 = ₹90,776. Amount after 2 more years: A = P(1 + r/n)^(nt) = ₹90,776(1 + 0.08)^2 = ₹90,776 × 1.1664 = ₹1,06,930. Total amount = ₹1,06,930. Final amount received = ₹1,06,930. Closest option: b) ₹1,06,930.
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