CA Foundation · Quantitative Aptitude · Mathematics of Finance
What is the compound interest earned on ₹16,000 for 3 years at 10% per annum, compounded annually?
The compound interest is ₹5,296. The amount after 3 years at 10% compounded annually is 16,000 × 1.331 = ₹21,296, and subtracting the principal of ₹16,000 leaves ₹5,296 as interest.
- A₹4,800
- B₹5,296Correct
- C₹5,360
- D₹21,296
Explanation
Amount = 16,000 × (1.1)^3 = 16,000 × 1.331 = ₹21,296. Compound interest = 21,296 − 16,000 = ₹5,296. The option ₹4,800 is simple interest (16,000 × 0.10 × 3), and ₹21,296 is the amount rather than the interest.
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