Multiple choice

A sum of Rs. 87,500 was invested by Kishor at 10% per annum compound interest. If, at the end of each year, income tax at the rate of 20% is deducted from the interest earned, then approximately how much amount would he have received after 3 years?

  1. Rs. 1,50,225

  2. Rs. 1,25,125

  3. Rs. 1,10,225

  4. Rs. 1,09,250

  5. Rs. 99,522
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Year 1: Interest = 87500 * 0.1 = 8750. Tax = 0.2 * 8750 = 1750. Net interest = 7000. New principal = 94500. Year 2: Interest = 9450. Tax = 1890. Net interest = 7560. New principal = 102060. Year 3: Interest = 10206. Tax = 2041.2. Net interest = 8164.8. Final amount = 102060 + 8164.8 = 110224.8.

AI explanation

After the first year, the interest is 10% of 87500, which is 8750, and after a 20% tax deduction, the net interest is 7000, making the total amount 94500. Repeating this for the second year gives a net interest of 7560 and a total of 102060, and for the third year, the net interest is 8165, bringing the final amount to approximately Rs. 1,10,225.

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