Multiple choice

Anil invests some money at a fixed rate of interest, compounded annually. If the interests accrued during the second and third years are Rs. 806.25 and Rs. 866.72, respectively, the interest accrued, in INR, during the fourth year is nearest to

  1. 926.84

  2. 929.48

  3. 931.72

  4. 934.65
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The interest in successive years forms a geometric progression because it is compounded annually. The ratio of the third year interest to the second year interest is 866.72 / 806.25 = 1.075. Multiplying the third year interest by this ratio gives 866.72 * 1.075 = 931.724.

AI explanation

The interest accrued during the third year equals the second year's interest multiplied by the annual growth factor, which is 866.72 divided by 806.25, giving a growth factor of about 1.075. Multiplying the third year's interest by this same growth factor gives the fourth year's interest as 866.72 multiplied by 1.075, which is approximately Rs. 931.72.

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