The simple interest on a certain sum at 6% per annum for three years is ₹ 1,200. Then, the compound interest on the same sum at the same rate for two years will be:

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MPPGCL JE Electrical 19 March 2019 Shift 2 Official Paper
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  1. ₹ 724
  2. ₹ 816
  3. ₹ 824
  4. ₹ 1,216

Answer (Detailed Solution Below)

Option 3 : ₹ 824
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Detailed Solution

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Given:

Simple interest (SI) = ₹ 1,200

Rate (R) = 6% per annum

Time (T) = 3 years

Formula Used:

Simple Interest (SI) = (P × R × T) / 100

Compound Interest (CI) = P (1 + R/100)n - P

Calculation:

To find the principal (P):

Simple Interest (SI) = (P × R × T) / 100

₹ 1,200 = (P × 6 × 3) / 100

₹ 1,200 = (18P) / 100

P = (₹ 1,200 × 100) / 18

P = ₹ 6,666.67

Now, to find the compound interest (CI) for 2 years:

CI = P (1 + R/100)n - P

CI = ₹ 6,666.67 (1 + 6/100)2 - ₹ 6,666.67

CI = ₹ 6,666.67 (1 + 0.06)2 - ₹ 6,666.67

CI = ₹ 6,666.67 (1.06)2 - ₹ 6,666.67

CI = ₹ 6,666.67 × 1.1236 - ₹ 6,666.67

CI = ₹ 7,490.670 - ₹ 6,666.67

CI = ₹ 824

The compound interest on the same sum at the same rate for two years is approximately ₹ 824.

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