The GATE Grind

GATE 2018 EC – Question 6

General Aptitude · Quantitative Aptitude: Arithmetic and Number Computation · 2 marks · Multiple choice

Leila aspires to buy a car worth Rs. 10,00,000 after 5 years. What is the minimum amount in Rupees that she should deposit now in a bank which offers 10% annual rate of interest, if the interest was compounded annually?

  1. 5,00,000
  2. 6,21,000
  3. 6,66,667
  4. 7,50,000

Practise this question in The GATE Grind →

Show answer and explanation

Correct answer: (B) 6,21,000

Explanation

The required deposit is the present value $\frac{10{,}00{,}000}{1.1^5}=\frac{10{,}00{,}000}{1.61051}\approx6{,}20{,}921\approx6{,}21{,}000$.