The compound interest on a certain sum at a certain rate percentage p.a. for the second and third years is ₹3,960 and 4,356, respectively. What sum is the amount of the same sum at the same rate in years, interest compounded annually?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. ₹45,738.
Growth from 2nd to 3rd year = 4356 - 3960 = 396
Rate (R) = (396/3960) × 100 = 10% p.a.
P(1 + 10/100)2 - P(1 + 10/100) = 3960
⇒ P(1.21) - P(1.1) = 3960
⇒ P(0.11) = 3960
⇒ P = 3960/0.11 = 36000
Amount after years = P(1 + 10/100)2 × (1 + 5/100)
= 36000 × (121/100) × (105/100)
= 45738