The simple interest on a certain sum for 3 ½ years at 10% per annum is Rs. 2,940. What will be the compound interest on the same sum for 2 ½ years at the same rate when interest is compounded yearly (nearest to rupee)?
Show answer & explanation
Correct answer: B
Explanation
Correct Answer is option 2 i.e. Rs. 2,272
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Concept |
Understanding |
Application |
Fair calculation |
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SI = (P × r × t)/100 CI = P[1 + r/100]t |
Let Principal = P r = 10% per annum t = 7/2 years SI = Rs. 2940 For CI: t = 5/2 years r = 10% per annum CI = ? |
SI: 2940 = [P × 10 × 7/2]/100 P = 8400 For CI: Cumulative rate of interest: 10 + 10 + (10 × 10)/100 = 21% Then 21 + 5 + (21 × 5)/100 = 27.05% CI = [8400 × 27.05]/100 ⇒ 2272.2 |
2940 = [P × 10 × 7/2]/100 P = 2940 × 20/7 P = 420 × 20 P = 8400 |