What will be the compound interest on a sum of ₹31250, at 12% compound interest (interest compounded yearly) in $2\frac{2}{3}$ years?
Answer & explanation
Correct answer: option 4
For 2/3rd year ,
Compound interest = 12 %× \(\frac{2}{3}\) = 8%
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 31250 [ 1 + \(\frac{12}{100}\) ]² × [ 1 + \(\frac{8}{100}\) ] - 31250
= 31250 [ \(\frac{28}{25}\) × \(\frac{28}{25}\) × \(\frac{27}{25}\) - 1 ]
= 31250[ \(\frac{21168}{15625}\) - 1 ]
= 31250 [ \(\frac{5543}{15625}\) ]
P = 11086