Multiple choice

A sum of money becomes Rs. 35,680 after 3 years and Rs. 53,520 after 6 years at a certain rate percentage p.a., interest compounded yearly. What is the compound interest on the same sum in the first case? (Your answer should be nearest to an integer)

  1. Rs. 11,983

  2. Rs. 11,893

  3. Rs. 10,842

  4. Rs. 11,938
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let P be the principal and R be the rate. A3 = P(1+r)^3 = 35680. A6 = P(1+r)^6 = 53520. (1+r)^3 = 53520 / 35680 = 1.5. P = 35680 / 1.5 = 23786.67. Compound interest for 3 years = 35680 - 23786.67 = 11893.33.

AI explanation

Since the amount at 6 years is the amount at 3 years compounded for another 3 years, the ratio 53520 divided by 35680 gives the growth factor for 3 years, which is 1.5. Therefore, the original principal is 35680 divided by 1.5, which is approximately 23786.67. The compound interest for the first 3 years is the first amount minus the principal, so 35680 minus 23786.67 gives Rs. 11893.

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