Multiple choice

Find the compound interest by using simple interest approach for Rs 5000 for 3 years at 8% per annum compounded annnually.

  1. $1298.56$
  2. $1289.00$
  3. $1.200.89$

  4. None of these
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A Correct answer
Explanation

The compound amount after 3 years is 5000 × (1.08)^3 = 6298.56. Subtracting the principal gives compound interest of 1298.56.

AI explanation

Using the simple interest approach, the first year interest is 8% of 5000 which is 400, making the second year principal 5400. The second year interest is 8% of 5400 which is 432, making the third year principal 5832, and the third year interest is 8% of 5832 which is 466.56. The total compound interest is 400 + 432 + 466.56 = 1298.56.

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