Multiple choice

The principle that amounts to Rs. $4913$ in $3$ years at $\displaystyle 6\frac{1}{4}$% per anmum compound interest compounded annually is

  1. Rs. $4096$
  2. Rs. $4085$
  3. Rs. $4076$
  4. Rs. $3096$
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A Correct answer
Explanation

The annual compound growth factor is 1 + 6.25/100 = 17/16. Therefore, the principal is 4913/(17/16)^3 = 4096 rupees.

AI explanation

Using the compound interest formula, the principal P equals the amount divided by (1 + R/100) raised to the time N. The rate is 6.25%, which is 1/16, so the principal is 4913 divided by (17/16)^3, which equals 4913 multiplied by (16/17)^3. Since 17 cubed is 4913 and 16 cubed is 4096, the original sum is Rs. 4096.

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