Multiple choice

The simple interest accrued on a sum of certain principal in 8 years at the rate of 13% per year is Rs. 6,500. What would be the compound interest accrued on that principal at the rate of 8% per year over 2 years?

  1. Rs. 1,040

  2. Rs. 1,020

  3. Rs. 1,060

  4. Rs. 1,200
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A Correct answer
Explanation

Simple interest 6500 = P * 0.13 * 8, so P = 6500 / 1.04 = 6250. Compound interest on 6250 at 8% for 2 years = 6250 * (1.08^2 - 1) = 6250 * 0.1664 = 1040.

AI explanation

Using the Simple Interest formula, the principal is calculated as (6500 * 100) / (8 * 13), which gives 6250. Using the Compound Interest formula for amount, A = P * (1 + R / 100)^n, we get A = 6250 * (1.08)^2, which evaluates to 6250 * 1.1664 = 7290. The compound interest is the amount minus the principal, meaning 7290 - 6250 = 1040. The result is Rs. 1,040.

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