Multiple choice

A sum of money becomes Rs 35280 after 2 years and Rs 37,044 after 3 years when lent on compound interest. Find the principal amount.

  1. Rs. 32000

  2. Rs. 34200

  3. Rs. 36400

  4. Rs. 38800

  5. None of these
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A Correct answer
Explanation

Amount after 2 years = Rs 35280. Amount after 3 years = Rs 37044. The difference Rs 37044 - Rs 35280 = Rs 1764 is the compound interest for the 3rd year on Rs 35280. So interest rate r = (1764/35280) × 100 = 5%. If amount after 2 years is Rs 35280 at 5% CI, then P(1.05)² = 35280, so P = 35280/(1.1025) = 35280 × 10000/11025 = Rs 32000. Verification: 32000 × 1.05² = 32000 × 1.1025 = Rs 35280 ✓ and 35280 × 1.05 = Rs 37044 ✓

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