Mr. Prakash borrowed a sum of Rs. 10000 from a finance company for 6 years at 8% per annum. The amount returned by Mr. Prakash to the finance company is:
- We have, P = Rs.. 10000, R = 8% per annum, T = 6 years. I = P x R x T = 10000 x 8 x 6 = Rs. 4800 100 100 A = P + 1 = 10000 + 4800 = Rs. 14800 This, Mr. Prakash returned Rs. 14800 to the finance company
Compound interest is calculated when interest is added to the principal amount and the interest earned in the previous period is added to the principal amount to calculate the interest for the current period, also known as compounding.
Formula for Compound Interest:
Compound Interest = P (1 + R/100) ^ n
Where,
P = Principal amount
R = Rate of interest
n = Time period
In the given question,
P = Rs.10000
R = 8%
n = 6 years
Calculating the Compound Interest:
Compound Interest = P (1 + R/100) ^ n
= 10000 (1 + 8/100) ^ 6
= 10000 (1.08) ^ 6
= 14800
Hence, the amount returned by Mr. Prakash to the finance company is Rs. 14800.
Option C is correct.
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