Multiple choice

An investment grows to Rs. 50,000 after 3 years and Rs. 61,250 after 9 years, when compounded annually. Determine the compound interest earned over 18 years as a percentage of the initial investment.

  1. 73.73%

  2. 78.78%

  3. 83.83%

  4. 88.88%

  5. None of these
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C Correct answer
AI explanation

The compound interest formula is Amount = Principal * (1 + R)^Time. We have 50000 = P(1 + R)^3 and 61250 = P(1 + R)^9. Dividing the second equation by the first gives (1 + R)^6 = 61250 / 50000 = 1.225. We need the compound interest over 18 years, which relies on finding (1 + R)^18. Cubing both sides of the equation gives (1 + R)^18 = 1.225^3 = 1.8383. The compound interest as a percentage of the initial investment P is (P * 1.8383 - P) / P * 100, resulting in 83.83%.

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