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A man gets a simple interest of Rs. 1,000 on a certain principal at the rate of 5 p.c.p.a. in 4 years. What compound interest will the man…

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A man gets a simple interest of Rs. 1,000 on a certain principal at the rate of 5 p.c.p.a. in 4 years. What compound interest will the man get on twice the principal in two years at the same rate ?

ARs. 1325
BRs. 1225
CRs. 1125
DRs. 1025

Correct answer: D

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Discussion 1

CCommunity11 Jul 2021

Rs. 1025

Principal = SI x 100/Time x Rate
= 1000 x 100/4 x 5
= Rs. 5000
Case II
Principal = Rs. 10000
Therefore CI = P [(1 + Rate/100)Time -1]
= 10000 [(1 + 5/100)² -1]
= 10000 x [(21/20)² -1]
= 10000 x 41/400
= Rs. 1025