A sum of Rs. 5000 amounts to Rs. 7200 in 8 years at a certain rate p.a. interest compounded yearly. What will be the compound interest on a sum of Rs. 6550 in 4 years at the same rate of interest?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e 1310
We know that,
Amount = P(1 + R/100)t
Where P is the principal, R = Rate, t = Time
Given that a sum of Rs. 5000 amounts to Rs. 7200 in 8 years at a certain rate percent p.a. compounded yearly
7200 = 5000(1 + R/100)8
⇒ (1 + R/100)8 = 36/25
⇒ (1 + R/100)4 = 6/5………………..(1)
Now,
P = Rs. 6500, t = 4 years and Rate = R
So,
Amount = P(1 + R/100)t
⇒ 6550(1 + R/100)4 = 6550 × 6/5 = 7860
Hence,
Interest = 7860 - 6550 = 1310