Multiple choice

On a certain amount, simple interest accrued at 12% per annum rate of interest for 6 years is Rs. 25,920. What will be the compound interest (in Rs.) accrued on the same amount at 8% per annum rate of interest compounding annually for 2 years?

  1. 4,326.30

  2. 5,563.40

  3. 5,888.60

  4. 5,990.40
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Principal = (25920 * 100) / (12 * 6) = 2592000 / 72 = 36000. Compound interest for 2 years at 8 percent = 36000 * ((1 + 8/100)^2 - 1) = 36000 * (1.1664 - 1) = 36000 * 0.1664 = 5990.40.

AI explanation

First, we find the principal by rearranging the simple interest formula: P equals (SI times 100) divided by (R times T), which gives (25920 times 100) divided by (12 times 6), equaling Rs. 36,000. Next, we calculate the compound interest on this principal for 2 years at 8% using the formula CI equals P times ((1 plus R divided by 100) raised to the power of n minus 1). Substituting the values gives 36000 times ((1.08) squared minus 1), which simplifies to 36000 times 0.1664. The compound interest accrued is Rs. 5990.40.

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