Question

A sum becomes Rs. 4840 in 2 years and Rs. 5856.4 in 4 years when compounded annually. What would be the amount if the same sum is invested @ 15% simple interest for 3 years?
1. 6100
2. 6400
3. 6083.50
4. 5800

Answer 1

Correct Answer - Option 3 : 6083.50

Given:

 A sum becomes Rs. 4840 in 2 years and Rs. 5856.4 in 4 years when compounded annually.

Formula:

 Amount under simple interest = P × r × t/100

Amount under compound interest = P + (P × r × t/100),

where P is Principal, r is rate of interest and t is time

Calculation:

 P(1 + r/100)² = 4840

P(1 + r/100)⁴ = 5856.4

Dividing both the equation we get,

5856.4/4840 = (1 + r/100)²

⇒ r = 10

⇒ P = 4000

Required amount = 4000(1 + 15/100)³ = Rs.6083.50