The interest on a sum of money at 10% p.a. for 2 years with interest being compounded annually is ₹630. Find the simple interest (in ₹) on the sum at the same rate of interest for 3 years.

Correct option is B

Given:

Interest (I) = ₹630

Rate (r) = 10% p.a.

Time (t) = 2 years

Formula used:

Compound Interest (CI) = P(1 +$$\frac{r}{100}$$​)^t- P

Simple Interest (SI) = $$\frac{P × r × t} { 100}$$​​

Solutions:

630 = P(1 + $$\frac{10}{100}$$​)²- P

=> 630 = P(1.1)²- P

=> 630 = P(1.21 - 1)

=> 630 = P(0.21)

=> P = $$\frac{630} { 0.21}$$​​

=> P = ₹3000

Simple Interest:

SI = $$\frac{ P × r × t} { 100}$$​​

SI = $$\frac{3000 × 10 × 3} {100}$$​​

=> SI = 3000 × 0.3

=> SI = ₹900

∴ The correct answer is (b).