If A person invests Rs 3000 in three years invesment that pays you 12% per annum. The future value of the investment will be Rs. 4080

Step-by-step explanation:

Given that,

Principal (P) = Rs. 3000

Time (t) = 3 years

Rate of interest (r) = 12% p.a.

Then using the relation [ I = Ptr/100 ], where I is the interest for the sum P at the rate of r% p.a. for t years, we get

I = Rs. (3000 × 3 × 12)/100

= Rs. 1080

Therefore the future value of the investment becomes

= Rs. (3000 + 1080)

= Rs. 4080

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Answer:

Depending on the accumulation formula you choose the future value can be:

Simple = 4080 rupees

Compound = 4214.78 rupees

Step-by-step explanation:

We can work out the future value using 2 formulas:

1) Simple interest method if the interest doesn't earn interest.

2) Compound interest if the amount is compounded annually.

Let's take the first case.

We have : S.I = Principle × rate × time

= 3000 × 3 × 12/100 = 1080

The future value of the investment is therefore = 3000 + 1080 = Rs 4080

Case two: Using compound interest accumulation

Future value = Principle × (1 + i)³

Doing the substitution we have:

= 3000 × (1.12)³ = Rs 4214.78