Question 85

If in 3 years at simple interest the principal increases by 18%, what will be the compound interest (in Rs) earned on Rs. 25,000 in 3 years at the same rate?

Solution

I = 18% of P

I = PTR/100

$$\frac{18P}{100}=\frac{P(3)R}{100}\rightarrow R=6$$%

Under CI,

Total amount = P$$(1+\frac{R}{100})^{n}$$

= 25000$$(1+\frac{6}{100})^{3}$$

= 25000$$(1+\frac{3}{50})^{3}$$

= 25000$$(\frac{53}{50})^{3}$$

= 25000($$\frac{148877}{125000}$$)

= 29775.4

CI =29775.4 - 25000 = 4775.4

So the answer is option A.

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