Question

A principal of Rs. 18,000 becomes Rs. 36,000 in 4 years, when invested in a scheme of simple interest. If the same sum is invested in a scheme of compound interest with same yearly interest rate (compounding annually), then how much amount will be received after 2 years ?
1. Rs. 29225
2. Rs. 29825
3. Rs. 28125
4. Rs. 27625

Answer 1

Correct Answer - Option 3 : Rs. 28125

Given: 

Principal is Rs. 18,000 

Amount after 4 years is Rs. 36,000

Formula used 

Simple Interest = Principal × Rate × Time/100 

Amount = P(1 + R/100)^t 

Calculation 

Simple Interest = 18,000 × R × 4/100 

⇒ 18,000 = 18,000 × 4 × R/100 

⇒ R = 25% 

Amount = 18,000(1 + 25/100)² 

⇒ 18,000 × 25/16

⇒ Rs 28,125

∴ The required answer is Rs 28,125