# What Will Be Compound Interest?

Vijay obtains a loan of Rs. 64000 against his fixed deposits. If the rate of interest be 2.5 paise per rupee per annum, what is the compound interest payable after 3 years.

- Rs. 4921
- Rs.3925
- Rs5052
- Rs.4573

**Answer: (1) Rs.4921**

**Explanation:-**

**Given-**

P = Rs.6400, R = 2.5 paisa per rupee per annum

or = 0.025 rupee per rupee per annum.

= 0.025 x 100 per hundred per annum

= 0.025 x 100 per cent per annum

= 2.5 per cent per annum.

Time = 3 years

**Formula-**

** Compound Interest = P [(1 + R/100) ^{t} – 1]**

**Where, P = principal, R = rate, t = time.**

Then, Compound Interest = 64,000 [(1 + 2.5/100)

^{3}– 1]

= 64,000 [(1 + 0.025)

^{3}– 1]

= 64,000 [(1.025)

^{3}– 1]

= 64,000 [1.0768 – 1]

= 64,000 x 0.0768

= 4921

Hence, the answer is (1) Rs.4921.