Simple interest accumulated on Rs.49500 over three years is Rs.17820. What compound interest would accumulate on the same principal under identical terms across that duration? (Round off your answer to two decimal places)
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Answer: A. Rs.20043.94
Explanation
Dividing seventeen eight twenty by three years on forty nine five hundred reveals an annual rate of twelve percent. Applying the twelve percent annual rate across three compounding periods yields the future compound amount. Subtracting the original principal from the compound amount gives twenty thousand forty three point ninety four. Simple interest accumulates a fixed monetary amount calculated solely on the original principal balance. Compound interest accumulates earnings on both the initial principal and previously accumulated interest amounts. Annual interest rate extraction requires dividing total simple interest by principal and time years.
Banking customers compare simple and compound interest loan structures over multi year repayment terms. Long term investment strategies favor compound interest vehicles to maximize wealth accumulation over time. Financial analysts calculate debt servicing costs under different compounding interest agreements. Option b underestimates the compound interest yield by applying an incorrect compounding frequency. Option c overestimates the total interest due to a miscalculated compounding growth factor. Option d results from an arithmetic rounding discrepancy during the intermediate calculation steps.
- Subject
- Mathematics
- Category
- Mathematics
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- —
- Difficulty
- medium
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