Can you please add an explanation. I don't know how to solve such problems.
Hello Shivani,
Can you share with us the particular question you're stuck on?
Hello Shivani,
The interest rate in 2015 for SBI is 6.5%.
1 million invested at the beginning of 2015 will become 10,65,000 by the end of 2015 as
10,00,000 * (1+0.065) = 10,65,000
The interest rate for HDFC in 7.5% in 2016.
10,65,000 invested at the beginning of 2016 will become 11,44,875 by the end of 2016 as
10,65,000 * (1+0.075) = 11,44,875
In this question you have taken the rate of interest as contant over the year whereas in the graph the rate of interest is changing over the year. So is it allowed to take contant ROI which is in the start??
Hello Shivani,
Yes, the rate of interest is taken as constant over the time you invest. The rate in the graph tells the rate that will be applicable if you put in your money at that given time.