Multiple choice

If the amount on a certain principal in 3 years at 12% rate of interest compounded annually is rupees 12000, what will be the amount in rupees after the fourth year?

  1. 14330

  2. 15440

  3. 13440

  4. 14550
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The amount after 3 years is Rs. 12000 at 12% compounded annually. For the 4th year, only one more year of interest applies at the same rate. Amount after 4th year = 12000 × 1.12 = Rs. 13440. Simply multiply by 1.12 to add one more year of compound interest.

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