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The simple interest on a certain sum for 2.5 years at 10% per annum is rs 5880. what will be the compound interest in on the same sum for 3 years at the same rate when interest is compound yearly.?


1. Rs. 9313
2. Rs. 9000
3. Rs. 7785
4. Rs. 9300

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Correct Answer - Option 3 : Rs. 7785

Given:

The Simple Interest, SI = 5880

Time, n = 2.5 years

Rate of Interest, r = 10%

Time = 3 years for CI

Formula:

SI = PRT/100

Amount = P(1 + R/100)n

CI = P(1 + R/100)n - P

Calculations:

The principal, P, is calculated as:

SI = PRT/100

⇒ 5880 = (P × 10 × 2.5)/100

⇒ P = (5880 × 100)/25

⇒ 23520

∴  the Principal is Rs. 23520.

The compound interest for the same sum in 3 years is calculated as follows;

⇒ CI = Amount - Principal

⇒ Amount = P(1 + r/100)3 

⇒ CI = P (1 + r/100) – P

⇒ 23520 (1 + 10/100)3 – 23520

⇒ 23520 (110/100)3 – 23520

⇒ (23520 × (11/10)3) – 23520

⇒ 31305.12 – 23520

⇒ Rs. 7785.12 = Rs. 7785

compound interest is Rs. 7785

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