The simple interest on a sum of money for 3 years at an interest rate of 6% p.a. is Rs.6,750. What will be the compound interest rounded off on the same sum at the same rate for the same period, compounded annually is closest to :
Answer & explanation
Correct answer: option 2
We know ,
Simple Interest = \(\frac{P×R×T }{100}\)
6750 = \(\frac{P×6×3 }{100}\)
Principal = 37500
Now ,
Compound interest = Principal × ( 1 + \(\frac{rate }{100}\) )t - Principal
= 37500 × ( 1 + \(\frac{6 }{100}\) )3 - 37500
= 37500 × ( \(\frac{106 }{100}\) )3 - 37500
= 7163.1
= Rs. 7163 ( approx)