Question : There is a 40% increase in an amount in 8 years at simple interest. What will be the compound interest on Rs. 10,000 after 3 years at the same rate?
Option 1: Rs. 1,576.25
Option 2: Rs. 6,305
Option 3: Rs. 7,881.25
Option 4: Rs. 4,728.75
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Correct Answer: Rs. 1,576.25
Solution :
Given:
There is a 40% increase in the amount in 8 years at simple interest (SI)
Principal ($P$) = Rs. 10000
Time ($T$) = 3 years
Let the rate of interest be $R$% per annum.
Formula Used:
SI = $\frac{PRT}{100}$
Compound interest (CI) = $P(1+\frac{R}{100})^{n}-P$
So, $\frac{40}{100} \times P= \frac{P \times 8 \times R}{100}$
⇒ $R = \frac{40}{8} = 5$%
We know that
CI = $10000(1+\frac{5}{100})^{3}-10000$
= $10000 \times 1.1576 -10000$
= $1576.25$
Hence, the correct answer is Rs. 1,576.25.
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