Multiple choice

A sum of money is lent at 8% compound interest. If the interest amount for the second year exceeds that for the first year by Rs. 32, find the sum lent.

  1. Rs. 8000

  2. Rs. 6000

  3. Rs. 5000

  4. Rs. 4000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Let P be the sum. Interest 1st year = 0.08P. Amount after 1st year = 1.08P. Interest 2nd year = 0.08 * 1.08P = 0.0864P. Difference = 0.0864P - 0.08P = 0.0064P = 32. P = 32 / 0.0064 = 5000.

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