What is the compound interest (in Rs) at the rate of 10%, compounded annually, for 3 years on the principle which in 8 years at the rate of 12% per annum gives Rs 4,800 as simple interest?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. 1655
Simple interest = Principal × (Rate/100) × Time
Given, 4800 = P × (12/100) × 8
Thus, P = 5000
Compound interest for 3 years at 10% p.a. for an amount of 5000 is
= 5000 × (1 + 10/100)3 - 5000
⇒ 5000 × (11/10)3 - 5000
⇒ 5000 × 1331/1000 - 5000
⇒ 6655 - 5000 = 1655