IAI Actuarial Core Principles · Actuarial Mathematics for Modelling · Equation of value
A sum of Rs 20,000 is invested for 3 years at a nominal rate of 12% per annum convertible monthly. What is the accumulated value, to two decimal places?
The accumulated value is Rs 28,615.38. The monthly rate is 1%, over 36 months the factor is 1.01^36 = 1.430769, and multiplying by Rs 20,000 gives the result.
- ARs 28,000.00
- BRs 28,098.60
- CRs 28,615.38Correct
- DRs 28,512.00
- Rs 28,243.20
Explanation
Monthly rate = 1%, number of periods = 36. 1.01^36 = 1.430769. So 20,000 × 1.430769 = 28,615.38. Using 12% annual compounding gives 28,098.56, which ignores the monthly conversion. Simple interest gives 27,200.
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