Question

The simple interest accrued on a sum of certain principal in 8 years at the rate of 13% per year is Rs.6500. What would be the compound interest accrued on that principal at the rate of 8% per year in 2 years ?

• A. Rs.1040
• B. Rs.1020
• C. Rs.1060
• D. Rs.1060

Answer 1

The Correct Option is A

To find the compound interest accrued on a principal over a period of time, we first need to determine the original principal amount using the given simple interest details. Then, we'll calculate the compound interest.

Step 1: Determine the Principal using Simple Interest
The formula for simple interest (SI) is: SI = (P * R * T) / 100, where P is the principal, R is the rate of interest per annum, and T is the time in years.

Given: SI = Rs.6500, R = 13%, T = 8 years.

We want to find P: 6500 = (P * 13 * 8) / 100.

Solve for P: P = (6500 * 100) / (13 * 8) = Rs.6250.

Step 2: Calculate Compound Interest
Now calculate compound interest (CI) at 8% per annum for 2 years.

The formula for compound interest is: CI = P * (1 + R/100)^T - P.

Using P = 6250, R = 8%, T = 2, we find:

A = 6250 * (1 + 8/100)² = 6250 * (1.08)².

Calculate: (1.08)² = 1.1664.

A = 6250 * 1.1664 = 7290.

Thus, CI = A - P = 7290 - 6250 = Rs.1040.

Therefore, the compound interest accrued on the principal is Rs.1040.