The compound interest on a certain sum at 10% p.a. for 21/3 years is Rs.1,201.60, interest compounded yearly. The sum is:

The compound interest on a certain sum at 10% p.a. for…

The compound interest on a certain sum at 10% p.a. for $2\frac{1}{3}$ years is Rs.1,201.60, interest compounded yearly. The sum is:

Show answer & explanation

Correct answer: B

Explanation

The correct answer is option 2 i.e Rs.4,800

Time(t) = $2\frac{1}{3}$ = 7/3 years

Compound interest = 1201.6

Compound interest = p(1 + r/100)^t - p

1201.6 = p(1 + 10/100)^7/3 - p

1201.6 = p(1 + 10/100)^{(2 + 1/3)} - p

1201.6 = p × (110/100) × (110/100) × (110/100)^1/3 - p

1201.6 = 1.25p - p

p = 1201.6/0.25 = 4806 ≈ Rs.4800

∴ The sum is Rs.4800.