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A sum of money becomes Rs.6690 after three years and Rs.10.035 after six years on compound interest. The sum is________?

Correct answer: C. Rs.4460

  • A. Rs.4400
  • B. Rs.4445
  • C. Rs.4460
  • D. Rs.4520

Explanation

For compound interest, the six-year amount divided by the three-year amount gives the growth factor for the next 3 years: Rs.10,035 ÷ Rs.6,690 = 1.5. Thus the three-year growth factor is 1.5, so the principal is Rs.6,690 ÷ 1.5 = Rs.4,460. A common mistake is choosing Rs.4,445, caused by treating the two amounts as if their difference were the interest on the original principal.

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