Question

A sum of Rs 2,432 amounts to Rs 2,681.28 in 2 years at a certain rate percent per annum, interest compounded yearly. What will be simple interest (in Rs) on the same sum for \(4\frac{3}{8}\) years at double the same rate?
1. 1,094.40
2. 1,276.80
3. 1,064
4. 1,368

Answer 1

Correct Answer - Option 3 : 1,064

Given:

Rs. 2,432 amounts to Rs.2,681.28 in 2 years 

Formulas used:

When the interest is compounded annually 

A = P (1 + r/100)n

Simple interest = P × R/100 × Time 

Calculation:

A = P (1 + r/100)ⁿ

⇒ 2681.28 = 2432 (1 + r/100)²

⇒ 2681.28/2432 = [(100 + r)/100]²

⇒ 441/400 = [(100 + r)/100]2

√441/400 = (100 + r)/100

⇒ 21/20 = (100 + r)/100

⇒ 105 = 100 + r 

⇒ r = 5%

Simple Interest on Rs.2432 at 10% p.a. for \(4\frac{3}{8}\) years. 

⇒ SI = 2432 × 10/100 × 35/8 

∴ Simple interest = Rs.1064