The simple interest on a sum at 3% p.a in 3 years is ₹315. What is the compound interest on the same sum at 4% p.a in 2 years, interest compounded yearly?
Answer & explanation
Correct answer: option 4
We know ,
Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
315 = \(\frac{Principal × 3 × 3}{100}\)
Principal = 3500
With compound interest , Amount = Principal × ( 1 + \(\frac{r }{100 }\) )t
= 3500 × ( 1 + \(\frac{4 }{100 }\) )2
= 3500 × \(\frac{26 }{25 }\) × \(\frac{26 }{25 }\)
= 3785.6
Amount = Principal + Compound Interest
3785.6 = 3500 + Compound Interest
Compound Interest = 3785.6 - 3500 = Rs.285.6