There is a 60% increase in an amount in 5 years at simple interest. What will be the compound interest on ₹ 6,250 for two years at the same rate of interest, when the interest is compounded yearly?

₹1,590

Simple interest of 5 years = 60%

Simple interest of 1 year = 12%

Now ,

Amount = Principal × ( 1 + \(\frac{rate }{100}\) )^t

= 6250× ( 1 + \(\frac{12 }{100}\) )²

= 6250 × \(\frac{28 }{25}\) × \(\frac{28 }{25}\)

= 7840

We know ,

Amount = Principal + Interest

7840 = 6250 + Interest

Interest = 7840 - 6250 = Rs. 1590