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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