Multiple choice

If the compound interest in the third year at 8% p.a. on a certain sum is Rs. 3,600, then what is the difference between the compound interest in the 4th and 5th year? (nearest to an integer in Rs.)

  1. Rs. 304

  2. Rs. 335

  3. Rs. 288

  4. Rs. 311
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Let P be the principal. CI for 3rd year = P(1+r)^2 * r = 3600. So P(1.08)^2 * 0.08 = 3600 => P * 1.1664 * 0.08 = 3600 => P = 3600 / 0.093312 = 38579.8. CI 4th year = P(1.08)^3 * 0.08 = 38579.8 * 1.2597 * 0.08 = 3888. CI 5th year = P(1.08)^4 * 0.08 = 38579.8 * 1.3605 * 0.08 = 4199.04. Difference = 4199.04 - 3888 = 311.04.

AI explanation

The compound interest for the fourth year is calculated by multiplying the third year's interest by 1.08, yielding 3600 multiplied by 1.08 which equals 3888. Similarly, the compound interest for the fifth year is 3888 multiplied by 1.08, resulting in 4199.04. The difference between these two amounts is 4199.04 minus 3888, which equals 311.04. Rounding to the nearest integer gives Rs. 311.

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