Question
Download Solution PDFThe simple interest on a certain sum of money for two years at 5% is ₹1,600. Find the compound interest at the same rate after 3 years, interest compounded annually.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Simple Interest (SI) for 2 years = ₹1,600
Rate (r) = 5% per annum
Formula used:
SI = (P × r × t) / 100
CI = P (1 + r/100)t - P
Calculation:
1600 = (P × 5 × 2) / 100
⇒ P = 1600 × 100 / (5 × 2)
⇒ P = ₹16,000
CI for 3 years:
CI = 16000 (1 + 5/100)3 - 16000
⇒ CI = 16000 (1.05)3 - 16000
⇒ CI = 16000 × 1.157625 - 16000
⇒ CI = 18522.00 - 16000
⇒ CI = ₹2,522
∴ The correct answer is option (3).
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