Shohaib placed Rs. 8000 in a scheme for 2 years at 5% p.a. compound interest. What payout will he receive upon maturity?
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Answer: E. None of these
Explanation
Calculating the compound amount for eight thousand at five percent per year for two years uses the growth formula. Multiplying eight thousand by one point zero five squared gives eight thousand eight hundred twenty rupees. Comparing this calculated maturity payout of eight thousand eight hundred twenty to options A through D shows none are correct. Compound interest formulas multiply the principal by one plus the rate raised to the power of time periods. Maturity payouts include both the original principal investment and all accumulated compound interest. Checking calculated financial results against multiple choice options ensures accuracy when none choices exist.
Savings accounts and fixed deposits use compound interest formulas to calculate long term investment growth. Financial literacy programs emphasize the superior growth of compound interest over simple interest over time. Banking institutions issue maturity statements based on precise compound growth calculations. Option A underestimates the compound return by calculating simple interest instead of compound growth. Option B represents the correct maturity payout which is absent from choices A through D. Option C overestimates the compound interest return due to an incorrect exponent calculation.
- Subject
- Mathematics
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- Mathematics
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- Difficulty
- medium
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