Ramesh invests Rs. 68,000 at 20% p.a. compound interest for 2 years. He then adds Rs. 16,000 more and invests the total for 1 more year at same rate. Find total amount after 3 years.
- AOption (a)
Rs. 1,46,704
- BOption (b)
Rs. 1,36,714
- COption (c)
Rs. 1,34,704
- DOption (d)
Rs. 1,36,704
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Correct answer
Rs. 1,36,704
Why this answer is correct
Shortcut Trick
Rate 20% = 1/5 ⇒ Multiplier = 6/5
Amount after 2 years = 68,000 × (6/5) × (6/5) = 68,000 × 1.44 = ₹97,920
New Sum after adding ₹16,000 = 97,920 + 16,000 = ₹1,13,920
Final Amount after 1 more year = 1,13,920 × (6/5) = 1,13,920 × 1.2 = ₹1,36,704
∴ The correct answer is Rs. 1,36,704.
Alternate Method
Given: Initial Principal (P1) = ₹68,000, Rate (R) = 20%, Time (t1) = 2 years, Addition = ₹16,000, Time (t2) = 1 year.
Formula: Amount (A) = P(1 + R/100)n
Calculation for the first 2 years:
⇒ Amount (A1) = 68,000 × (1 + 20/100)2
⇒ A1 = 68,000 × (1.2)2
⇒ A1 = 68,000 × 1.44 = ₹97,920
Total amount after adding more money:
⇒ New Principal (P2) = 97,920 + 16,000 = ₹1,13,920
Calculation for the 3rd year:
⇒ Final Amount = 1,13,920 × (1 + 20/100)1
⇒ Final Amount = 1,13,920 × 1.2 = ₹1,36,704
∴ The correct answer is Rs. 1,36,704.
Additional Information
Compound Interest Formula
Amount A = P(1 + R/100)n, where P is Principal, R is Rate, and n is time in years. Compound Interest CI = A − P.
Effective Rate for 2 Years
If the rate is R% for two years, the effective compound interest rate is (R + R + R2/100)%. For 20%, it is 20 + 20 + 4 = 44%.
Successive Growth
Compound interest is an example of successive percentage growth. When additional capital is added, the new sum becomes the principal for the subsequent period.
