Question

The simple interest on a sum of money at the rate of 7% per annum for a period of 3 years is Rs. 6300. What will be the compound interest (in Rs.) on the same sum of money, compounded annually, for the same period and at the same rate of interest? (near Rs.1)
1. 6980
2. 6981
3. 6752
4. 6751

Answer 1

Correct Answer - Option 4 : 6751

Simple Interest = Rs. 6300 

Rate% = 7%, Time = 3 years

Formula Used:

S.I = PRT/100

C.I = P [(1 + R/100)n - 1]

Where, S.I = Simple Interest, C.I = Compound Interest

P = Principal, R = Rate, T or n = Time in years

Calculation:

According to the question 

6300 = (P × 7 × 3)/100

⇒ 21 P = 630000

⇒ P = 30000

Now, we have to find the compound interest

C.I = 30000 [(1 + 7/100)3 - 1]

⇒ C.I = 30000 × (225043/1000000)

⇒ C.I = 30000 × 0.225043

⇒ C.I = 6,751.29

∴ The compound interest is nearly 6751.