Ram invested 45% of his salary in a scheme for 3 years which offers 10% per annum compound interest, compounded annually. If he receives ₹5,958 as total interest, then find Ram's salary?
Answer & explanation
Correct answer: option 4
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
5958 = P [ 1 + \(\frac{10}{100}\) ]³ - P
5958 = P [ \(\frac{11}{10}\) × \(\frac{11}{10}\) × \(\frac{11}{10}\) - 1 ]
5958 = P [ \(\frac{1331}{1000}\) - 1 ]
5958 = P [ \(\frac{331}{1000}\) ]
P = 18000
As, P is equals to 45% of total salary.
So, Total salary = \(\frac{18000}{45}\) × 100
= \(\frac{18000}{9}\) × 20
= Rs. 40000