# How Much Will be Compound Interest?

The simple interest accrued on an amount of 25,000 at the end of four years is 8000 What would be the compound interest accrued on the same amount at the same rate in the same period?

1. 8612.256
2.  9005.256
3.  012.22
4.  None of these
Gopal Default Asked on 30th July 2015 in

Explanation:-
Given-
Principal = Rs.25,000,  Time = 4 years,  Simple Interest = Rs.8000
Formula-
Simple Interest = P x R x T/100
Where, P = principal , R = rate, & T = time.
Then,
8000 = 25000 x 4 x R/100
8 = 25 x R/25
R = 8 %
Formula-
Compound Interest = P [(1 + R/100)t – 1]
Where, P = principal, R = rate, t = time.
Then, Compound Interest = 25000[(1 + 8/100)4 – 1] = 25000 [(1 + 2/25)4 – 1]
= 25000 [(27/25)4 – 1]
= 25000 x 27 x 27 x 27 x 27 /25 x 25 x 25 x 25  – 25000
= 1000 x 27 x 27  x 27 x 27 /25 x 25 x 25 – 25000
= 40 x 27 x 27 x 27 x27 /25 x 25 – 25000
= 8 x 27 x 27 x 27 x 27 /5 x 25 – 25000
= 4251528/5 x 25 – 25000
= 34012.22 – 25000
= 9012.224
Hence, the answer is (4) None of these.

Anurag Mishra Professor Answered on 1st August 2015.