A sum of money was lent at 12.5% rate of yearly compound interest for three years. If the present value (i.e. after three years) of the sum of money is ₹13,851, then how much money (in ₹) was lent?
- AOption (a)
10000
- BOption (b)
10278
- COption (c)
8728
- DOption (d)
9728
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Correct answer
9728
Why this answer is correct
Given:
Rate (r) = 12.5%
Time (t) = 3 years
Amount (A) = ₹13,851
Principal (P) = ?
Formula used:
A = P(1 + r/100)t
Calculation:
13,851 = P(1 + 12.5/100)3
⇒ 13,851 = P(1 + 0.125)3
⇒ 13,851 = P(1.125)3
⇒ P = ₹9728
∴ The correct answer is option (4).