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Dear sir in the lectures of simple interest
In the example 1Why can’t we find the future value by simply doing the below formula
Fv = pv + ( pv x rate x no of period )
That is
800 + ( 800 x 0.15 x 4 )
= 1280
Because In the answers it’s stated as 1200
Whereas when the formula is applied it appears 1280 …
Please clarify this sir
What you are doing is assuming that the interest is calculated on $800 for each of the 4 years.
That is not the case because the man is not putting $800 on deposit at the start. He only puts $200 on deposit at the start and only that will earn interest for all 4 years. The second $200 is deposited a year later and that will only earn interest therefore for 3 years, and so on.
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