Discussion
The compound interest on Rs. 75,000 for three years, at successive interest rates of 4%, 6% and 9% for each year respectively is :
Answer: A
The compound interest is Rs. 15,121.20.
With a different rate each year, the principal is multiplied by each year's growth factor in turn:
\[ \begin{aligned} A &= 75000 \times 1.04 \times 1.06 \times 1.09 \\ &= 78000 \times 1.06 \times 1.09 \\ &= 82680 \times 1.09 = 90121.20 \end{aligned} \]
\[ \text{CI} = 90121.20 - 75000 = 15121.20 \]
Simple interest at the three rates would give \(75000 \times 0.19 = 14250\); the extra comes from interest earned on interest. The other options differ by whole thousands and come from slips in the multiplication.
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