There is 70% increase in an amount in 7 years at simple interest. What will be the compound interest on ₹8000 after 3 years at the same rate of interest?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹2,648.
The amount increased by 70% in 7 years.
For compound interest sum = Rs. 8000
Time = 3 years
Simple Interest = (P × T × R)/100
Compound Interest = [P(1 + R/100)T - 1] Here, P = sum, T = time, R = rate
Let the amount be Rs. 100a.
So, increased amount = 100a + 100a × 70% = 170a
Interest = 170a - 100a = 70a
Let the rate of the interest be R.
70a = (100a × 7 × R)/100
7aR = 70a
R = 70a/7a = 10%
C.I. = 8000[(1 + 10/100)3 - 1] = 8000[(1 + 1/10)3 - 1] = 8000[(11/10)3 - 1] = 8000[(1331/1000) - 1] = 8000[(1331 - 1000)/1000] = 8000[331/1000] = 8 × 331 = 2648