# 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

- Rs. 1261
- Rs. 1260
- Rs. 1265
- Rs. 1263

**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.