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At the end of three years what will be the compound interest at the rate of 10% p.a. on an amount of Rs.20000?

Correct answer: A. Rs.6620

  • A. Rs.6620
  • B. Rs.6500
  • C. Rs.6800
  • D. Rs.6400

Explanation

The compound interest on Rs. 20,000 for 3 years at 10% is Rs. 20,000[(1.10)^3 - 1] = Rs. 20,000 x 0.331 = Rs. 6620. Therefore the interest is Rs. 6620, not the final amount. The likely mistake is choosing option c, Rs. 6800, by estimating the growth instead of compounding the 10% rate three times.

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