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Ebrahim decides to have BD1225 income through investment in a business at the end 7 years
Ebrahim decides to have BD1225 income through investment in a business at the end 7 years. What amount should he invest if the annual interest rate is 12%
Select one:
a. BD 1458.33
b. BD1548.33
c. BD1358.33
d. BD 1258.33
Expert Solution
a) BD 1458.33
The following amount can given in the options can only be achieved through simple interest. So for the sake of this question, we are assuming the sum is invested at simple interest.
Ebrahim needs 1225 in 7 years, thus every year needs to get 1225/7 or BD 175
Since this 175 is the amount he needs to get, this is the interest amount. The interest rate is 12%. The amount he needs to invest is
Interest amount = Interest Rate * Sum
175 = 0.12*Sum
Sum = 175/0.12 = 1458.33
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