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Rs 50,000.00 investment in 1 yr FD & rolled over annual for the next 2 yrs Interest rate for 1 yr is 5% pa. int rate for 2 & 3 yr are 6% & 6.5% pa

<p>Rs50,000.00 investment in1 year FD and rolled over annual for the next2 yrs.  Interest rate for1 yr is5% p.a. Expected int rate for  2 and3 yr are6% and6.5% p.a. Cal the FV of the investment after3 yrs and average interest rate?</p>

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Question added by Mohammad Ali , Accounts Officer ( Contract) , Bharat Pumps & Compressors Ltd Naini Allahabad
Date Posted: 2014/10/27

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Dasarathi Rath
by Dasarathi Rath , Sr. Accountant , Al Luban Special Investment LLC

If the FD amount is fixed one year then the interest is fixable at5%. The the FD is rolled next two year interest is fixable at the rolling time how much market rate of interest but not decided 6 and 6.5 % interest rate same time. fixed deposit are give the return at one time, how long you invest the period but the interest rate is not changed.. When the interest rate is changed if you have renewed at the maturity date.. If you renewal or rolling that the interest rate is =5+6+6.5=17.5 % is the three year interest rate. Then average interest rate =17.7/3=5.8333%, Thank you

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