If in 3 years at simple interest the principal increases by 18%, what will be the compound interest (in Rs.) earned on Rs. 25,000 in 3 years at the same rate?
Answer & explanation
Correct answer: option 1
Let the principal = Rs. 100
Amount becomes Rs. 118 in 3 years
So, S.I. = 18 = \(\frac{100×R×3}{100}\) ⇒ R = 6%
⇒ 6% = \(\frac{3}{50}\)
Therefore, C.I. :
Principal : Amount
1st year 50 : 53
2nd year 50 : 53
3rd year 50 : 53
Total: 125000 : 148877
C.I. = 148877 - 125000 = 23877
ATQ,
125000R = 25000
1R = 0.2
C.I. = 23877R = 23877 × 0.2 = 4755.4