Question

Govind invested some money in HDFC at 3% per annum rate of interest. What would be the corresponding simple interest (in ₹) if after 2 years, Govind got ₹203 as compound interest, considering annual compounding?

• A. 200
• B. 195
• C. 215
• D. 210

Answer 1

Answer:

A. 200

Let the principal be (P) and rate (r = 3% = 0.03).

Use Compound Interest formula (for 2 years)

$\text{CI} = P\left[(1+r)^2 - 1\right]$
$203 = P\left[(1.03)^2 - 1\right]$
$203 = P(1.0609 - 1) = P(0.0609)$

$P = \frac{203}{0.0609} = \frac{203}{609/10000} = \frac{203 \times 10000}{609} = \frac{2030000}{609} = 3333.\overline{3}$

Find Simple Interest for 2 years

$\text{SI} = \frac{P \times r \times t}{100}$
$\text{SI} = \frac{3333.\overline{3} \times 3 \times 2}{100}$
$= 3333.\overline{3} \times 0.06 = 200$

Final Answer: ₹200