The compound interest earned after three years and that earned after two years on a certain sum of money, differ by Rs 2940. What is the principal sum of money if the rate of interest is 16.67% p.a?
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11829
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12940
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13260
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20560
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None of these
E
Correct answer
Explanation
Using CI formula: A = P(1+r)^t. Difference CI(3yr) - CI(2yr) = P[(1+r)³ - (1+r)²] = P(1+r)²[(1+r)-1] = P(1+r)²r. r = 16.67% = 1/6. P × (7/6)² × (1/6) = 2940. P × 49/36 × 1/6 = 2940. P × 49/216 = 2940. P = 2940 × 216/49 = 12960. Not in options, so E is correct.