Three years ago, Rahul borrowed a sum of money at compound interest rate of 10% per annum compounding annually. If the present value of that borrowed money is Rs.11,979, how much money was borrowed by Rahul?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. Rs.9,000.
A = P(1 + R/100)T
where, A = Amount, P = Principal, R = rate, and T = Time
⇒ 11979 = P(1 + 10/100)3
⇒ 11979 = P(1 + 1/10)3
⇒ 11979 = P(11/10)3
⇒ (11979 × 10 × 10 × 10)/(11 × 11 × 11) = P
⇒ P = Rs.9000