At a certain sum of money with the interest rate of 6% per annum for 4 years, the simple interest is Rs. 4500. Find the compound interest (compounding annually) of 2 years at the same sum when the rate of interest is 4% per annum?
Answer & explanation
Correct answer: option 1
Rate (R) = 6%
Time (T) = 4 year
Simple Interest (S.I.) = 4500
if Principal (P) = 100%
Interest (I) = Rate × Time
= 6 × 4 = 24%
ATQ,
24% = 4500
1% = \(\frac{4500}{24}\)
100% = Rs 18750
P = 18750
T = 2 year
Rate = 4%
Compound Interest for 2 years = R + R + \(\frac{R×R}{100}\)
= 4 + 4 + \(\frac{4×4}{100}\)
= 8 + \(\frac{16}{100}\)
= 8 + 0.16
= 8.16 %
ATQ
100% = 18750
1% = \(\frac{18750}{100}\)
8.16% = \(\frac{18750}{100}\)×8.16
= Rs 1530