The compound interest on ₹4,000 at the rate of 5% p.a. is ₹630.50, then the time period is:
Answer & explanation
Correct answer: option 3
The formula that we used here is :-
Compound interest = Amount - Principal
Compound interest = P$(1 \;+\; \frac{R}{100})^t$ - P
630.50 = 4000 [$(1 \;+\; \frac{5}{100})^t$- 1 ]
\(\frac{1261}{8000}\) = [ $(1 \;+\; \frac{1}{20})^t$ - 1 ]
\(\frac{1261}{8000}\) + 1 = ( 1 + \(\frac{1}{20}\) )t
\(\frac{9261}{8000}\) = ( \(\frac{21}{100}\) )t
( \(\frac{21}{20}\) )³ =( \(\frac{21}{20}\) )t
So,
t = 3
Hence , time is 3 years.