Question:
Tick (✓) the correct answer:
If the simple interest on a sum of money at 5% per annum for 3 years is Rs 1200 then the compound interest on the same sum for the same period at the same rate will be
(a) Rs 1225
(b) Rs 1236
(c) Rs 1248
(d) Rs 1261
Solution:
(d) Rs 1261
Here, SI $=\frac{P \times 5 \times 3}{100}$
$\Rightarrow 1200=\frac{P \times 5 \times 3}{100}$
$\Rightarrow P=\frac{1200 \times 100}{5 \times 3}=$ Rs 8000
Amount at the end of 3 years $=$ Rs $8000 \times\left(1+\frac{5}{100}\right)^{3}$
$=$ Rs $8000 \times\left(\frac{105}{100}\right)^{3}$
$=$ Rs $8000 \times\left(\frac{21}{20}\right) \times\left(\frac{21}{20}\right) \times\left(\frac{21}{20}\right)$
$=$ Rs $(21 \times 21 \times 21)$
$=$ Rs 9261
$\therefore$ CI $=A-P=$ Rs $(9261-8000)=$ Rs 1261