Question

A certain sum amounts to Rs. 14400 after 2 years and to Rs. 17280 after 3 years, interest
is being compounded annually.Find the principal.
O
Rs. 14568
O
Rs. 13485
O
Rs. 10000
Rs. 12584​

Answer 1

Concept:

Compound Interest-

• Compound interest is calculated on the initial principal of a deposit or loan, which also takes into account all of the accumulated interest from prior periods.
• The yearly interest rate is raised to the number of compound periods minus one, and the starting principal amount is multiplied by both of these factors.
• The frequency plan for compounding interest can be set to be continuous, daily, or yearly.
• The quantity of compounding periods has a big impact on compound interest calculations.
• Compound interest will pay you more over the course of your life the younger you are. In actuality, you are supersizing your finances.
• Formula,

                                Amount = Principal (1 + rate)^time

Given:

• A1 = 14400
• T1 = 2 years
• A2 = 17280
• T1 = 3 years

Find:

Principal amount

Solution:

Applying the above formula,

14400 = P (1+r)^2

17280 = P(1+r)^3

Solving the above equations,

17280=14400(1+r)

1.2=1+r

r=0.2

Rate is 20%

Now,

14400 = P (1.2)^2

P = 14400/1.44

P = 10000

Principal is 10000

Hence, we can conclude that Principal amount is Rs. 10000 and option (c) is correct.

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