Multiple choice

The compound interest accrued on an amount of Rs. 18,000 at the end of three years is Rs. 5,958. What would be the simple interest accrued on the same amount at the same rate in the same period?

  1. Rs. 5,100

  2. Rs. 5,400

  3. Rs. 5,700

  4. Rs. 4,800

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

For 3 years, CI = P((1+r)^3 - 1) = 5958. With P=18000, (1+r)^3 - 1 = 5958/18000 = 0.331. Thus (1+r)^3 = 1.331, so 1+r = 1.1 and r = 10%. Simple interest for 3 years at 10% is 18000 * 0.1 * 3 = 5400.

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