Question

Kunal took a loan for 3 years at 4% per annum compound interest. If the total interest t was Rs. 78,040. Calculate the principal.
1. Rs. 6,25,000
2. Rs. 5,60,000
3. Rs. 2,45,000
4. Rs. 7,50,000

Answer 1

Correct Answer - Option 1 : Rs. 6,25,000

Given

Time = 3 years

Rate = 4%

Interest = Rs. 78,040

Formula used

Compound interest = P{[1 + (r%)]^t - 1}

Calculation

78,040 = P{[1 + (4/100)]³ - 1}

⇒ 78,040 = P{(104/100)³ - 1}

⇒ 78,040 = P{(26/25)³ - 1}

⇒ 78,040 = P (17576 - 15625)/15625

⇒ 78040 = P(1951/15625)

⇒ P = (78040 × 15625)/1951

⇒ P = Rs. 6,25,000

∴ Principal is Rs. 6,25,000