What will be the Compound Interest? If

If the simple interest on a certain sum at 5% per annum for 3 years is Rs. 1,200. then the compound interest on the same sum for the same period at the same rate is

  1. Rs. 1261
  2. Rs. 1260
  3. Rs. 1265
  4. Rs. 1263
Monis Rasool Professor Asked on 14th November 2015 in Maths.
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  • 1 Answer(s)

    Answer: (1) Rs. 1261

    Explanation:-
    Let the principal be Rs. X

    Given-
    Rate = 5%, Time = 3 years  and simple interest = Rs. 1200

    Then, 1200 = X x 5 x 3 /100
    400 = X/20
    X = 400 x 20
    X  = Rs. 8000

    Then, the compound interest for 3 years,
    Amount = 8000 (1 + 5/100)^3
    = 8000 x (1 + 1/20)^3
    = 8000 x (21/20)^3
    = 8000 x 21 x 21 x  21 /20 x 20 x 20
    = 21 x 21 x 21
    = Rs. 9261

    So, the compound interest = 9261 – 8000
    = Rs. 1261

    Then, the compound interest on the same sum for the same period at the same rate is Rs. 1261.

    Hence, the answer is (1) Rs. 1261.

    Anurag Mishra Professor Answered on 14th November 2015.
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