NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Investment Landscape
Mr. Sharma invested Rs 50,000 in a fixed deposit at 8% p.a. compounded annually. What is the maturity value after 2 years?
The maturity value is Rs 58,320. With annual compounding at 8% for two years, the multiplier is 1.08 squared, which is 1.1664, applied to Rs 50,000. Simple interest would give only Rs 58,000, ignoring interest earned on the first year's interest.
- ARs 58,000
- BRs 58,320Correct
- CRs 58,640
- DRs 57,600
Explanation
Maturity = 50,000 x 1.08 x 1.08 = 50,000 x 1.1664 = Rs 58,320. Rs 58,000 is the simple interest answer (50,000 + 2 x 4,000 = 58,000). Rs 57,600 uses 1.152 incorrectly, and Rs 58,640 is unsupported.
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