Mathematics for FinancePYQ June 24Question 1261 of 512
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Ram borrowed 5,000\displaystyle 5,000 at 12.5%\displaystyle 12.5\% per annum compound interest. The money was repaid after 3\displaystyle 3 years. The total interest paid by him approximately is (1+0.125)3=1.4238\displaystyle (1+0.125)^3 = 1.4238

Options

A2,119\displaystyle 2,119
B2,200\displaystyle 2,200
C2,000\displaystyle 2,000
D2,100\displaystyle 2,100
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Correct Answer

✅ Option a — 2,119\displaystyle 2,119

All Options:

  • A2,119\displaystyle 2,119
  • B2,200\displaystyle 2,200
  • C2,000\displaystyle 2,000
  • D2,100\displaystyle 2,100

Detailed Solution & Explanation

**Derivation of Compound Interest** Given: - Principal (P\displaystyle P) = Rs. 5,000\displaystyle \text{Rs. }5,000 - Rate (r\displaystyle r) = 12.5%=0.125\displaystyle 12.5\% = 0.125 per annum - Time (t\displaystyle t) = 3\displaystyle 3 years - Given: (1+0.125)3=1.4238\displaystyle (1 + 0.125)^3 = 1.4238 **Step 1: Calculate Future Value (A\displaystyle A)** A=P(1+r)tA = P(1 + r)^t A=5000(1+0.125)3A = 5000(1 + 0.125)^3 Using the given value (1.125)3=1.4238\displaystyle (1.125)^3 = 1.4238: A=5000×1.4238=Rs. 7,119A = 5000 \times 1.4238 = \text{Rs. }7,119 **Step 2: Calculate Compound Interest (CI\displaystyle CI)** CI=A−P=7119−5000=Rs. 2,119CI = A - P = 7119 - 5000 = \text{Rs. }2,119 Hence, **Option A** is the correct answer.

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