The simple interest on a sum of money at 10% per annum for 4 years is ₹3,200. What will be the amount (in ₹) of the same sum for the same period at the same rate of interest when the interest is compounded annually?
Answer & explanation
Correct answer: option 4
Simple interest =10%
S.I. for 4 years = 10 × 4 = 40%
Therefore,
⇒ 40% of Principal = 3200
⇒ Principal = \(\frac{3200}{40}\) × 100 = Rs. 8000
Now,
Amount at (C.I.) = P (1+\(\frac{R}{100}\))t
= 8000 (1+\(\frac{10}{100}\))4
= 8000(\(\frac{11}{10}\))4
= Rs. 11712.80