Multiple choice

There is 80% increase in an amount in 8 years at simple interest. What will be the compound interest of Rs. 18000 after 3 years at the same rate?

  1. $5800$
  2. $3780$
  3. $6018$
  4. $5958$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

80% increase in 8 years means rate = 80/8 = 10% per annum. CI = P(1 + r)^n - P = 18000(1.1)^3 - 18000 = 18000(1.331 - 1) = 18000(0.331) = Rs. 5958. The compound interest formula accounts for interest on interest.

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