Question

A sum of ₹10,000 is borrowed at an interest rate of 7% compounded annualy, then the interest for the fourth year is_______.

• A. ₹857.53
• B. ₹882.53
• C. ₹895.53
• D. ₹899.53

Answer 1

The correct option is A

₹857.53

Here, Principal (P) = ₹10,000

Rate of interest (R) = 7%

For n = 3 years
Amount (A) = $P{(1+\frac{R}{100})}^n$

$=10000{(1+\frac{7}{100})}^3$

$=10000{\left(\frac{107}{100}\right)}^3$

$=$ ₹12,250.43

For n = 4 years
Amount (A) $=P{(1+\frac{R}{100})}^n$

$=10000{(1+\frac{7}{100})}^4$

$=10000{\left(\frac{107}{100}\right)}^4$

$=$ ₹13,107.96
Interest for 4th year = Amount for 4 years - Amount for 3 years = ₹13,107.96 - ₹12,250.43 = ₹857.53