PRC-2 · Chapter 3 · Question 22 of 45
A business deposits Rs. 5,000 into a fund in year 1. They decide to increase the annual deposit by exactly 20% each subsequent year. What is the precise deposit amount required in the 5th year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Rs. 10,368
Explanation
A constant percentage increase forms a geometric progression. Here a = 5000, r = 1.20, and n = 5. The 5th term is a*r^4 = 5000 * (1.2)^4 = 5000 * 2.0736 = Rs. 10,368.
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