A certain sum amounts to Rs 291600 in 2 Years and to Rs 314928 in 3 years on compound interest compounded annually. How much will be the simple interest (In Rs) on Rs 40000 at the same rate for 2 years?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 6400.
Given :
Amount in 2 years = Rs 291600
Amount in 3 years = Rs 314928
Formula used :
Compound interest = P(1 + R/100)T - P
Amount = P(1 + R/100)T ---- (1)
P = principal, R = rate, T = time period
Simple interest = PRT/100 ----- (2)
Calculations :
Using equation (1), we get
⇒ 291600 = P(1 + R/100)2 ------ (3)
⇒ 314928 = P(1 + R/100)3 ------ (4)
Dividing equation (4) by (3)
⇒ 1.08 = (1 + R/100)
⇒ 108 = (100 + R)
⇒ R = 8%
Now, using equation (2)
⇒ Simple interest = (40000 × 8 ×2)/100 = Rs 6400