Multiple choice

A certain sum is lent at compound interest for three years. The rate of interest for the three years are 5%, 8% and 10% respectively. If the amount at the end of three years is 1,247.40, find the sum.

  1. 1000

  2. 1050

  3. 1080

  4. 1100
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A Correct answer
Explanation

Let the sum be P. P * (1.05) * (1.08) * (1.10) = 1247.40. P * 1.2474 = 1247.40. P = 1000.

AI explanation

Using the successive compound interest formula, Amount = Principal multiplied by (1 + 0.05) multiplied by (1 + 0.08) multiplied by (1 + 0.10). This gives 1247.40 = Principal multiplied by 1.05 multiplied by 1.08 multiplied by 1.10, which simplifies to 1247.40 = Principal multiplied by 1.24740. Dividing 1247.40 by 1.24740 yields a principal of 1000.

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