Multiple choice

If a sum of money amounts to Rs 1540 in 12 years with a rate of 12% compound interest, then what will be the interest in 13th year for the same amount at the same rate of interest?

  1. Rs 184.8

  2. Rs 154.4

  3. Rs 144.8

  4. Rs 154.8

  5. None of these
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A Correct answer
Explanation

Amount after 12 years at 12% CI = Rs 1540. Principal P = 1540 / (1.12)^12 ≈ 1540 / 3.896 ≈ Rs 395.3. Interest in 13th year = Amount at end of 13th year - Amount at end of 12th year = P(1.12)^13 - P(1.12)^12 = P(1.12)^12(1.12 - 1) = 1540 × 0.12 = Rs 184.8. This is because CI interest for any year = 12% of previous year's amount.

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