A sum of money becomes ₹13,380 after 3 years and ₹20,070 after 6 years at compound interest. What is the sum?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → ₹8,920
At compound interest the amount is multiplied by the same factor \((1+r)^3\) in every block of 3 years. So the growth from year 3 to year 6 shows that factor, and the same factor took the sum to its value at year 3.
\((1+r)^3=\displaystyle\frac{20070}{13380}=1.5\)
Sum \(=\displaystyle\frac{13380}{1.5}=8920\), that is, ₹8,920