A certain sum amounts to ₹11,520 in 4 years at the rate of 15% p.a. simple interest. What will be the amount of the same sum in 2 years at the same rate, if the interest is compounded 8-monthly (nearest to a ₹)?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. ₹9,583.
Amount = P + (P × R × T)/100
⇒ 11520 = P + (P × 15 × 4)/100
⇒ 11520 = 1.6P
⇒ P = 11520/1.6 = 7200
8-month period = 8/12 = 2/3 year
Number of periods in 2 years = 2/(2/3) = 3 periods
Rate per period = 15% × (2/3) = 10% per period
Amount = P × (1 + R/100)n
= 7200 × (1 + 10/100)3
= 7200 × (11/10)3
= 9583.20
= 9583 (approx)