Question

Sarang invested some money in HDFC at 4% per annum rate of interest. What would be the corresponding simple interest (in &) if after 2 years, Sarang got #153 as compound interest, considering annual compounding?

• A. 145
• B. 160
• C. 150
• D. 165

Answer 1

Answer:

C. 150

Given:
Rate (r = 4%) p.a., Time (t = 2) years, annual compounding
Compound Interest (CI) after 2 years = ₹153

$\text{CI} = P\left[(1+\tfrac{r}{100})^2 - 1\right]$
$153 = P\left[(1.04)^2 - 1\right]$
$153 = P(1.0816 - 1) = 0.0816P$
$P = \frac{153}{0.0816} = 1875$
$\text{SI} = \frac{P \times r \times t}{100}$

$\text{SI} = \frac{1875 \times 4 \times 2}{100} = 1875 \times 0.08 = 150$

Corresponding Simple Interest = ₹150