The simple interest on a sum of money at 10% per annum for 4 years is Rs3200. What will be the amount (in Rs) of the same sum for the same period at the same rate of interest when the interest is compounded annually?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 11,712.80
Let the sum be P
3200 = (P × 4 × 10) /100
⇒ P = 3200 × (10/4)
⇒ P = 8000
Now,
A = 8000(1 + 10/100)4
⇒ A = 8000(1 + 1/10)4
⇒ A = 8000(11/10)4
⇒ A = 8000(14641/10000)
⇒ A = 11712.80