Question 64

The simple interest on a sum of money for 3 years at an interest rate of 6% p.a. is Rs.6,750. What will be the compound interest rounded off on the same sum at the same rate for the same period, compounded annually is closest to :

Solution

Simple interest = $$\frac{prt}{100}$$

r = 6%

t = 3 years

6750 = $$\frac{p\times 6 \times 3}{100}$$

p = Rs.37500

Compound interest = p(1 + $$\frac{r}{100})^t - p$$

= 37500(1 + $$\frac{6}{100})^3 - 37500$$

= 37500 $$\times \frac{106}{100} \times \frac{106}{100} \times \frac{106}{100} - 37500$$

= 44663.1 - 37500 = 7361.1 $$\approx$$ Rs.7361

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