Ashok is to receive an amount of Rs. 15,00,000 from his relative after 3 years. He wants to buy a house for which he wants the money to be paid now. His relative had already invested the money at the rate of 9.25%. Calculate how much money Ashok will get now?
To calculate how much money Ashok will get now, we need to find the present value of Rs. 15,00,000 after 3 years at an interest rate of 9.25%.
We can use the formula for present value of a future amount:
Present Value = Future Value / (1 + interest rate)^n
Where:
- Future Value is Rs. 15,00,000
- Interest Rate is 9.25% or 0.0925 (in decimal form)
- n is the number of years, which is 3 in this case
Plugging in the values, the formula becomes:
Present Value = 15,00,000 / (1 + 0.0925)^3
Now, let's solve this equation to get the present value:
Present Value = 15,00,000 / (1.0925)^3
Calculating (1.0925)^3 = 1.28 (approximately)
Present Value = 15,00,000 / 1.28
Present Value = Rs. 11,71,875 (approximately)
Therefore, Ashok will get approximately Rs. 11,71,875 now.