Multiple choice

If compound interest received on a certain amount in the 3rd year is Rs. 7056, what will be the compound interest (in Rs) for the 4th year on the same amount if rate of interest is 12% ?

  1. 7784.24

  2. 7854.5

  3. 7896.24

  4. 7902.72
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let principal be P. CI in 3rd year = P(1.12)³ - P(1.12)² = P × 1.12² × 0.12 = 7056. So P × 1.2544 × 0.12 = 7056, giving P = 7056/0.150528 = 49000 (approx). CI in 4th year = P(1.12)⁴ - P(1.12)³ = P × 1.12³ × 0.12 = 49000 × 1.404928 × 0.12 = 7902.72.

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