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Exercise 5.2 · Q23

Q.An antique's present worth is ₹9000. If its value appreciates at the rate of 10% per year, its worth 3 years from now is:

(i) ₹6561
(ii) ₹10,890
(iii) ₹11,979
(iv) ₹12,000
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Appreciating ₹9000 at 10% per year for 3 years gives ₹11,979 — option (iii).

[!FORMULA] A=P(1+r)nA=P(1+r)^n

PP = present worth, rr = annual appreciation rate (decimal), nn = number of years.

  1. Given P=9000, r=10%=0.1, n=3P=9000,\ r=10\%=0.1,\ n=3.
  2. A=9000(1.1)3A=9000(1.1)^3.
  3. Compute (1.1)3(1.1)^3: 1.1×1.1=1.211.1\times1.1=1.21; then 1.21×1.1=1.3311.21\times1.1=1.331. …

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