The amount received on a certain sum at the same annual rate of interest after 3 years and 5 years on compound interest (compounding annually) is Rs. 15972 and Rs. 19326.12 respectively. What is that sum?
Show answer & explanation
Correct answer: B
Explanation
Given:
Amount after 3 years = 15,972
Amount after 5 years = 19,326.12
A₅ / A₃ = (1 + r)²
= 19,326.12 / 15,972
= 1.21
(1 + r)² = 1.21
1 + r = 1.1
r = 0.1 = 10%
15,972 = P(1.1)³
= P × 1.331
P = 15,972 / 1.331 = ₹12,000