Multiple choice

A sum of money becomes Rs.6,500 after 3 years and Rs.10,562.50 after 6 years on compound interest. The sum is -

  1. Rs.4,000

  2. Rs.4,500

  3. Rs.4,800

  4. None of these
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A Correct answer
AI explanation

Since the amount after 6 years is the amount after 3 years compounded for another 3 years, we have 10562.50 = 6500 times (1 plus Rate divided by 100) cubed. Solving for the growth factor gives (1 plus Rate divided by 100) cubed = 10562.50 divided by 6500, which equals 1.625. The principal is the amount after 3 years divided by this growth factor, so Principal = 6500 divided by 1.625, which results in Rs. 4000.

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