What is the compound interest on a sum of Rs.12,000 for 21/8 years at 8% p.a. When the interest is compounded annually? (nearest to a rupee)
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e Rs.2,697.
| Understanding/Application |
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Time = 21/8 years = 2 + 5/8 years We can find the interest for the first 5/8 years by simple interest. S.I. = (P × R × T)/100 P = Rs. 12,000 R = 8% S.I = (12000 × 8 × 5/8)/100 = Rs. 600 p = 12000 + 600 = Rs. 12,600 |
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C.I. = p(1 + r/100)t - p C.I. = 12600(1 + 8/100)2 - 12600 C.I. = (12600 × 108/100 × 108/100) - 12600 C.I. = 14696.64 - 12600 C.I. = 2096.64 ≈ 2097 Total interest = 2097 + 600 = Rs. 2697 |