Discussion
Ramesh deposited Rs. 15,600 in a fixed deposit at 10% per annum simple interest. After every second year he adds his interest earning to the principal. The interest added at the end of 4th year is
Answer: C
Simple interest for the first two years is 15,600 x 10% x 2 = Rs 3,120, which is added to the principal, making Rs 18,720.
The interest for the next two years is 18,720 x 10% x 2 = Rs 3,744, the interest added at the end of the 4th year, option C. Rs 1,716 and Rs 1,872 are interest for one year on the wrong principal, and Rs 1,560 is one year's interest on the original principal.
The interest is added only after every second year, so the third and fourth years earn interest on the larger principal and the second block is bigger than the first.
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