Question : What is the compound interest on a sum of INR 25,000 after three years at a rate of 12% per annum interest compounded yearly?
Option 1: INR 9,824.00
Option 2: INR 10,520.00
Option 3: INR 9,956.86
Option 4: INR 10,123.20
Correct Answer: INR 10,123.20
Solution :
Principal = INR 25000
Rate of interest = 12% p.a.
Time period = 3 years
C.I. = P × [(1 + $\frac{\text{r}}{100})^\text{t}$ – 1]
where C.I. is compound interest, P is principal, r is the rate of interest, and t is the time period.
So, C.I. = 25000 × [(1 + $\frac{12}{100})^3$ – 1]
= 25000 × $\frac{21952 - 15625}{15625}$
= INR 10123.20
$\therefore$ The compound interest is INR 10123.20.
Hence, the correct answer is INR 10123.20.
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