A principal gets increased by 21% in 2 years at compound interest. What will be the simple interest on ₹1000 for 4 years at the same rate of interest?
Answer & explanation
Correct answer: option 2
Compound interest for 2 years = 21%
Amount = Principal × ( 1 + \(\frac{R }{100}\) )t
Let principal = 100
So , 121 = 100 × ( 1 + \(\frac{R }{100}\) )2
\(\frac{121 }{100}\) = ( 1 + \(\frac{R }{100}\) )2
\(\frac{11 }{10}\) = ( 1 + \(\frac{R }{100}\) )
\(\frac{R }{100}\) = \(\frac{1 }{10}\)
R = 10%
Now , Simple Interest = \(\frac{Principal ×Rate × Time }{100}\)
= \(\frac{1000 × 10× 4 }{100}\)
= Rs. 400