# On what sum of money will the compound interest for 3 years at 5% per annum amount to 630.50?

- Rs. 1200
- Rs. 1261
- Rs. 4000
- Rs. 3000

**Answer: (3) Rs. 4000**

**Explanation: –**

Let the principal be Rs. X

**Given-**

Time = 3 years, Rate = 5% Compound Interest = Rs. 630.50

630.50 = X {(1 + 5/100)^3 – 1}

= X { (21/20)^3 – 1}

= X { 21 x 21 x 21 /20 x 20 x 20 – 1}

= X (9261 – 8000)/8000

630.50 = 1261 X/8000

X = 630.50 x 8000 /1261

X = 4, 000

Then, the principal will be Rs. 4, 000

Hence, the correct answer is option (3) Rs. 4, 000.