Question : A sum of INR 1,00,000 was taken from a bank at the rate of 7% p.a to be compounded annually for 5 years. Calculate the compound interest. (Closest to an INR)
Option 1: INR 40,000
Option 2: INR 20,963
Option 3: INR 40,567
Option 4: INR 40,255
Correct Answer: INR 40,255
Solution : Given: Principal = INR 100000 Rate = 7% Time = 5 years We know that, $CI= P((1+\frac{R}{100})^{T}-1)$ $= 100000((1+\frac{7}{100})^{5}-1)$ $= 100000((\frac{107}{100})^{5}-1)$ $= 100000(\frac{14025517307}{10000000000}-1)$ $= 100000(\frac{14025517307-10000000000}{10000000000})$ $= 100000(\frac{4025517307}{10000000000})$ $= \frac{4025517307}{100000}$ $= 40255.17307$ = 40255 (Closest to an INR) Hence, the correct answer is INR 40255.
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