Multiple choice

A sum of Rs. 18,000 is lent at 10% p.a. compound interest, compounded annually. What is the difference between the compound interest for 3rd year and 4th year?

  1. Rs. 220.60

  2. Rs. 217.80

  3. Rs. 221.80

  4. Rs. 215.40
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount after 2 years = 18000 * (1.1)^2 = 21780. Interest for 3rd year = 21780 * 0.10 = 2178. Amount after 3 years = 21780 * 1.1 = 23958. Interest for 4th year = 23958 * 0.10 = 2395.8. Difference = 2395.8 - 2178 = 217.80.

AI explanation

To find the interest for the third year, calculate the amount after two years as 18000 * (1.10)^2 = 21780, and the third year interest is 10 percent of this, which is 2178. The amount after three years is 21780 plus 2178 = 23958, so the interest for the fourth year is 10 percent of 23958, which equals 2395.80. The difference between the fourth year and third year interest is 2395.80 minus 2178, resulting in Rs. 217.80.

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