Question

If Rs. 3125 is invested at the rate of 4% per annum for \(2\frac{1}{2}\) years at compound interest, and the interest is being calculated annually, what will be the final amount received?
1. Rs. 3258.80
2. Rs. 3496.20
3. Rs. 3447.60
4. Rs. 3243.40

Answer 1

Correct Answer - Option 3 : Rs. 3447.60

Given:

Principal = Rs. 3125

Rate = 4%

Time = \(2\frac{1}{2}\) years = (2 + 1/2) years

Formula used: 

A = P(1 + R/100)^T₁ ×(1 + RT₂/100)

Where,

A = Amount, P = Principal, R = Rate

T = Time

Calculation:

Time = (2 + 1/2) years

T₁ = 2 years, T₂ = 1/2 years

A = P(1 + R/100)T1 ×{1 + (RT​ ₂)/100)

⇒ A = 3125 × (1 + 4/100)² × {1 + 4/200)}

⇒ A = 3125 × (26/25)² × (51/50)

⇒ A = 3447.60

∴ The amount is Rs. 3447.60