IGNOU BCOC 134 2026 2027 - If the firm alternatively considers a simple interest investment

Question

If the firm alternatively considers a simple interest investment at 10% per annum for the
same period, compute the maturity value.

12 Aug 2026

Answer :

Word Count : 748

The maturity value of a simple interest investment is determined by adding the simple interest earned during the investment period to the original principal amount. In Business Mathematics and Statistics, simple interest is one of the basic methods used for calculating the return on an investment when interest is calculated only on the original principal and not on accumulated interest. The standard formula for simple interest is: [ SI=\frac{P \times R \times T}{100} ] where (SI) represents simple interest, (P) represents the principal amount invested, (R) represents the annual rate of interest expressed as a percentage, and (T) represents the period of investment in years. The maturity value, also called the amount, is calculated as: [ A=P+SI ] Therefore, [ A=P+\frac{P \times R \times T}{100} ] or, [ A=P\left(1+\frac{RT}{100}\right) ] In the given question, the firm considers a simple interest investment at 10% per annum for the same period. Thus, the rate of interest is: [ R=10% ] If the principal amount is (P) and the investment period is (T) years, the

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