Multiple choice

If a sum of money amounts to Rs. 7896 after 4 years and to Rs. 14,576 after 8 years on compound interest, find the approximate sum.

  1. Rs. 3845

  2. Rs. 4277

  3. Rs. 4526

  4. Rs. 2563

  5. Rs. 2536
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Let the principal be P and the compounding factor for 4 years be x = (1 + r)^4. We are given P * x = 7896 and P * x^2 = 14,576. Dividing the second equation by the first gives x = 14,576 / 7896, which is approximately 1.846. Substituting this back into the first equation, we find P = 7896 / 1.846, which is approximately Rs. 4277.

AI explanation

In compound interest, the ratio of the amount after 8 years to the amount after 4 years gives the growth factor for 4 years, so 14576 / 7896 equals approximately 1.846. To find the original principal, divide the 4-year amount by this growth factor, which is 7896 / 1.846. This calculation provides an approximate initial sum of Rs. 4277.

Keep practicing — related questions