A sum of money becomes 130% of itself in 3 years at simple interest. What will…
2019
A sum of money becomes 130% of itself in 3 years at simple interest. What will be the interest on ₹16,000 for 3 years, compounded annually?
- A.
5236
- B.
5296
- C.
5186
- D.
5138
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Correct answer: B
Find the annual rate from simple interest: Amount becomes 130% in 3 years, so 1 + 3r = 1.30 ⇒ 3r = 0.30 ⇒ r = 0.10 = 10% per annum.
Compute the compound amount for ₹16,000 at 10% for 3 years: A = 16,000 × (1.10)^3 = 16,000 × 1.331 = ₹21,296.
Find the interest: Interest = ₹21,296 − ₹16,000 = ₹5,296.
Answer: The compound interest for 3 years is ₹5,296.