The compound interest on a sum at 18% p.a. for years, compounded yearly, is ₹1,431. Find the principal.
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. ₹5,000.
SI = (P × R × T)/100
Amount after compounding = P(1 + R/100)n
Time = 1.5 years (1 year + 0.5 year)
Amount after 1 year = P(1 + 18/100) = 1.18P
SI of 1.18P for 0.5 year = (1.18P × 18 × 0.5)/100 = 0.1062P
Total amount after 1.5 years = 1.18P + 0.1062P = 1.2862P
CI = 1.2862P - P = 0.2862P = 1431
⇒ P = 1431/0.2862 = 5000