Multiple choice

A principal amount is placed in a simple-interest deposit. It becomes Rs. 17,500 after 5 years and Rs. 21,500 after 9 years. If the same principal amount were instead invested for 3 years at the same nominal annual rate, compounded half yearly, approximately how much interest (in rupees) would it earn?

  1. Rs. 3,713

  2. Rs. 3,731

  3. Rs. 3,317

  4. Rs. 3,371
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest: P + 5I = 17500, P + 9I = 21500. 4I = 4000, I = 1000. P = 17500 - 5000 = 12500. Rate R = (1000/12500) * 100 = 8%. Compound interest for 3 years half-yearly at 8% p.a. (4% per half-year, 6 periods): 12500 * (1.04^6 - 1) = 12500 * (1.2653 - 1) = 12500 * 0.2653 = 3316.25.

Keep practicing — related questions