Correct Answer - Option 4 : Rs. 1261

**Given:**

Principal = Rs. 8000

Rate of interest = 5% per annum

Time = 3 years

**Formula used:**

A = P(1 + r/100)^{n}

Compound interest = A - P

Where, A = Amount

P = Principal

r = Rate of interest

n = Time in years

**Calculation:**

A = 8000(1 + 5/100)^{3}

⇒ A = 8000 × 21/20 × 21/20 × 21/20

⇒ A = 9261

Compound interest = 9261 - 8000

⇒ Compound interest = Rs. 1261

**∴ Compound interest is Rs. 1261.**