Multiple choice

Choose the correct answer form the alternatives given. A sum of money amounts to Rs. 4624 in 2 years and to Rs. 4913 in 3 years at compound interest. The sum is

  1. Rs. 4096

  2. Rs. 4260

  3. Rs. 4335

  4. Rs. 4360
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A Correct answer
Explanation

The amount in the third year divided by the amount in the second year gives the annual growth factor: 4913/4624 = 17/16. Therefore, the amount one year before 4624 is 4624 × 16/17 = 4096.

AI explanation

The compound interest for the third year alone is 4913 minus 4624, which equals Rs. 289. This means the interest rate is 289 divided by 4624, which is 1/16 or 6.25% per annum. Using the present value formula, the original sum is the amount after 2 years divided by (1 + r)^n, so Principal = 4624 divided by (17/16)^2. Calculating 4624 divided by (289/256) gives the original sum of Rs. 4096.

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