The simple interest on a certain sum at the end of three years at 5% p.a. is Rs.1,200. The compound intereset on the same sum for the same period at the same rate is (interest compounded yearly):
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e Rs.1,261.
| Understanding/Application |
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Rate = 5% p.a. Time = 3 years S.I. = Rs. 1200 S.I. = (P × R × T)/100 A = P[1 + (R/100)]T C.I. = A - P |
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P = (1200 × 100)/(5 × 3) = Rs. 8,000 Amount = Rs. 8000 × [1 + (5/100)]3 = Rs. 9261 |