Multiple choice

A sum of money amounts to Rs 4,624 in 2 years and to Rs. 4,913 in 3 years at compound interest. The sum is

  1. Rs. 4,096

  2. Rs. 4,260

  3. Rs. 4,360

  4. Rs. 4, 609
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A = P(1+r)^n. 4624 = P(1+r)^2 and 4913 = P(1+r)^3. Dividing: 4913/4624 = 1+r. 1+r = 1.0625. P = 4624 / (1.0625)^2 = 4624 / 1.1289 = 4096.

AI explanation

The difference between the amount after 3 years and the amount after 2 years is the interest earned during the third year, which is 4913 minus 4624, giving Rs. 289. The rate of interest is this third year interest divided by the second year amount, or 289 divided by 4624, which equals 1/16. The principal is the amount after 2 years divided by (1 + 1/16) squared, so 4624 divided by (17/16)^2 gives Rs. 4096.

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