The simple interest on a sum of money for 3 years at an interest rate of 6% p.a. is Rs.6,750. What will be the compound interest rounded off on the same sum at the same rate for the same period, compounded annually is closest to :
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e Rs.7,163
| Understanding | Application |
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The simple interest is the product of principal, rate of interest per annum & the time period divided by 100. Compound interest = P(1 + r / 100)t - P |
Simple interest = (principal × rate of interest × time period) / 100 ⇒ SI = (P × r × t) / 100 ⇒ 6750 = (P × 6 × 3) / 100 ⇒ P = Rs. 37500 The compound interest for the given sum will be as follows. ⇒ SI = 37500(1 + 6 / 100)3 - 37500 ⇒ SI = 44663.1 - 37500 ⇒ Rs. 7163.1 |