Discussion
How much money invested at compound interest will yield Rs. 6350.40 at the end of 3 years? For the first year the rate of interest is 5%; for second year it increases to 12% and for third year it decreases to 8%.
Answer: D
\[ A = P\left(1 + \frac{R}{100}\right)^{n}, \qquad \text{CI} = A - P, \qquad \text{SI} = \frac{PRn}{100} \]
The rate changes each year, so chain the three growth factors.
\[ P \times 1.05 \times 1.12 \times 1.08 = 6350.40 \]
\[ 1.05 \times 1.12 = 1.176, \qquad 1.176 \times 1.08 = 1.27008 \]
\[ P = \frac{6350.40}{1.27008} = \text{Rs. } 5000 \]
The order of the three rates makes no difference, since multiplication commutes - only their product matters.
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