Multiple choice

A sum of Rs. 2000 at 40% per annum is compounded annually. Calculate the interest for the third year at compound interest.

  1. 1500

  2. 1600

  3. 1568

  4. 1750

  5. N/a
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Principal = 2000, Rate = 40%. Amount after 2 years = 2000 * (1.4)^2 = 2000 * 1.96 = 3920. Amount after 3 years = 3920 * 1.4 = 5488. Interest for 3rd year = 5488 - 3920 = 1568.

AI explanation

Using the compound interest formula A = P(1 + R/100)^T, the amount at the end of the second year is 2000 x (1.4)^2 = Rs. 3920. The interest for the third year is calculated on this second year amount, which is 3920 x 0.40 = Rs. 1568.

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