There is a 60% increase in an amount in 5 years at simple interest. What will be the compound interest on Rs.6,250 for two years at the same rate of interest, when the interest is compounded yearly?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is Option 4 i.e. Rs.1,590.
| Understanding/Application |
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Principal = P Rate = r Time = 5 years Amount = 160P/100 P + (P × r × 5)/100 = 160P/100 Pr/20 = 60P/100 r = 12% |
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C.I. on Rs. 6250 for 2 years at 12% = 6250(1 + 12/100)2 - 6250 = 6250(112/100)2 - 6250 = 6250(1.12)2 - 6250 = 6250(1.2544) - 6250 = 6250(0.2544) = Rs. 1590 |