An amount grows by 60% in 6 years at S.I. What is the C.I. on Rs. 12,000 over 3 years at the same rate?
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Answer: C. Rs. 3972
Explanation
A sixty percent increase in six years at simple interest indicates a ten percent annual interest rate. Applying this ten percent annual interest rate to twelve thousand rupees over three years under compound interest. Calculating the compound amount and subtracting the principal yields three thousand nine hundred seventy-two rupees. Simple interest grows linearly by a fixed percentage of the principal amount every single year. Compound interest calculates interest on both the initial principal and all accumulated prior interest amounts. Financial formulas determine compound interest totals using principal multiplied by one plus rate to power of time.
Bankers calculate investment returns by comparing simple interest yield curves against compound interest products. Financial analysts evaluate loan growth projections using annual percentage interest rate compounding formulas. Economists model long-term debt accumulation using compound interest growth equations over multi-year horizons. Option A suggests twenty-one sixty rupees which underestimates compound interest returns over three years. Option B suggests thirty-one twenty rupees which corresponds to a simple interest calculation rather than compound. Option D suggests sixty-two forty rupees which represents an arithmetic calculation error in interest totals.
- Subject
- Mathematics
- Category
- Mathematics
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- —
- Difficulty
- medium
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