Multiple choice

The compound interest on a certain sum for 2 years at 15% per annum is Rs. 3,641, when the interest is compounded 8-monthly. The sum is:

  1. 9000

  2. 9600

  3. 11000

  4. 10000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

For 8-monthly compounding at 15% p.a., the rate per 8-month period is 15% × (8/12) = 10%. In 2 years, there are 2 × 12/8 = 3 periods. Using CI = P[(1 + r)^n - 1], we get 3641 = P[(1.10)³ - 1] = P[1.331 - 1] = P(0.331). Therefore, P = 3641/0.331 = Rs. 11,000.

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