Discussion
What will be the compound interest on a sum of Rs. 25,000 after 3 years at the rate of 12 p.c.p.a.?
Answer: C
\[ A = P\left(1 + \frac{R}{100}\right)^{n}, \qquad \text{CI} = A - P, \qquad \text{SI} = \frac{PRn}{100} \]
\[ \text{CI} = 25000\left[(1.12)^{3} - 1\right] \]
\[ (1.12)^{3} = 1.404928 \]
\[ \text{CI} = 25000(0.404928) = \text{Rs. } 10{,}123.20 \]
Simple interest would be \( 25000 \times 0.36 = 9000 \), so the compounding adds a little over Rs. 1100 - which is why the 9000-ish option is offered.
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