A sum of Rs. 15,000 is lent at 16% p.a. compound interest. What is the difference between the compound interest for the second year and the third year?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is Option 1 i.e. Rs. 445.44
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Concept |
Understanding |
Application |
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For compound interest: A = P(1 + r/100)T |
Given: P = Rs. 15000 r = 16% per annum CI |
Amount after 1st year = 15000 (1 + 16/100) =150 × 116 = Rs. 17400 Amount after 2 year = 17400 (1 + 16/100) = 174 × 116 = Rs. 20184 Amount after 3 year = 20184(1 + 16/100) = 201.84 × 116 = 23413.44 Interest for 2nd year = Amount after 2 years – Amount after 1 year = 20184 – 17400 = Rs. 2784 Interest for 3rd year = Amount after 3 years – Amount after 2 years = 23413.44 – 20184 = Rs. 3229.44 Required difference = 3229.44 – 2784 = Rs. 445.44 |