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Question

Find the CI on 20,000 for 3 years at 10% per annum compounded annually.


A

6,620

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B

6,000

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C

26,620

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D

₹26,000​

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Solution

The correct option is A

6,620


C.I.=P[1+R100]nP

where, C.I. is the compound interest, R is the rate of interest per annum, P is the principal and n is the number of years.

Substituting P = ₹20,000, R = 10%, n = 3 years we get

C.I=20,000[1+10100]320,000.

C.I=20,000(110100)320,000

=20,000(110100)320,000

= 20,000(110×110×110100×100×100)20,000

= ₹26,620 - ₹20,000

= ₹6,620

Hence, C.I = ₹6,620


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