A certain sum invested on compound interest (compounded annually) grows to Rs. 5040 in three years. If the rate of interest is 20% for the first year, 40% for the second, and 50% for the third year, then what is the sum?
Answer & explanation
Correct answer: option 4
The Formula that we used here is -
Amount = P$(1 \;+\; \frac{R}{100})^t$
Let initial sum = P
P × ( 1 + \(\frac{20}{100}\) )× ( 1 + \(\frac{40}{100}\) )× ( 1 + \(\frac{50}{100}\) ) = 5040
P × \(\frac{6}{5}\) × \(\frac{7}{5}\) × \(\frac{3}{2}\) = 5040
P = 5040 × \(\frac{5}{6}\) × \(\frac{5}{7}\) × \(\frac{2}{3}\)
= Rs.2000