Multiple choice

Mike lend out Rs. 64,000 and yield a compound interest of Rs. 61,000 in 3 years. At what rate did he lend out the money?

  1. 30%

  2. 25%

  3. 20%

  4. 15%

  5. 10%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Amount = P + CI = 64000 + 61000 = 125000. Using A = P(1 + r/100)^n, 125000 = 64000(1 + r/100)^3. So (1 + r/100)^3 = 125000/64000 = (5/4)^3. Thus 1 + r/100 = 5/4, r/100 = 1/4, r = 25%.

AI explanation

The total amount A after 3 years is the principal plus the compound interest, giving 64000 + 61000 = Rs. 1,25,000. Using the compound interest formula A = P(1 + R/100)^n, we establish the equation 125000 = 64000(1 + R/100)^3. Dividing both sides by 64000 gives (1 + R/100)^3 = 125/64, and taking the cube root of both sides results in 1 + R/100 = 5/4, so the rate R is 25%.

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