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Simple interest on a certain sum of money at the rate of 5% per annum for 4 years is Rs. 800. What will be the compound interest on the same sum for t
Question



Simple interest on a certain sum of money at the rate of 5% per annum for 4 years is Rs. 800. What will be the compound interest on the same sum for the same period and at the same rate of interest?

A.

850

B.

840

C.

855

D.

862

Correct option is D

Given
Rate = 5%, Time = 4 years and Simple interest = 800
SI = P × R × T/100
Where, P = principal
R = rate,T = time
CI = P( 1 + r/100)n - P
Where, P = principal, n = time
Let the principal be P.
SI = (P × R × T)/100
800 = (P × 5 × 4)/100
P = 4000
CI = 4000( 1 + 5/100)4 - 4000
CI = 4000 × (105/100)4 - 4000
CI = (4000 × 21/20 × 21/20 × 21/20 × 21/20) - 4000
CI = 4862.025 - 4000
C.I = 862.025 ≈ Rs. 862

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