Multiple choice

In 3 years, the principal increases by 15% at simple interest. What will be the approximate compound interest earned (in Rs. lakh) on Rs. 15 lakh in 3 years at the same rate?

  1. 7.81

  2. 2.87

  3. 2.36

  4. 3.38
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest for 3 years is 15%, so rate = 5% per year. Compound interest for 3 years at 5% = 15 * ((1.05)^3 - 1) = 15 * (1.157625 - 1) = 15 * 0.157625 = 2.364375, which is approximately 2.36.

AI explanation

If the principal increases by 15% in 3 years under simple interest, the annual interest rate is 5%. For compound interest, the amount A is calculated as 15 * (1.05)^3, which equals 15 * 1.157625 = 17.364375 lakh. Subtracting the original principal of 15 lakh gives a compound interest of approximately 2.36 lakh.

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