The compound interest on a certain sum of money for 3 years, compounded annually, at a rate of interest of 10% per annum is ₹1,324. The sum is:
Answer & explanation
Correct answer: option 3
The formula that we used here is :-
Amount = P$(1 \;+\; \frac{R}{100})^t$
Compound interest = Amount - Principal
1324 = [ P × ( 1 + \(\frac{10}{100}\) )³ ] - P
1324 = P [ \(\frac{11}{10}\) × \(\frac{11}{10}\) × \(\frac{11}{10}\) - 1]
1324 = P [ \(\frac{1331}{1000}\) - 1]
1324 = P [ \(\frac{1331 - 1000}{1000}\)]
1324 = P [ \(\frac{331}{1000}\)]
P = Rs. 4000
So, Initial sum is Rs. 4000