Compound Interest Practice Test 1

Question : 24 of 40

Marks: +1, -0

Mr Das invested Rs 87,500 at 10% p.a. compound interest. Income tax at the rate of 20% is levied at the end of each year. Find the amount received after 3 years.

Rs 1,50,225
Rs 99,522
Rs 1,10,225
Rs 1,25,125
Rs 1,09,250

Validate

Solution:

If 20% of tax is deducted from the interest amount, it implies that 80% of interest amount stays back.
So the actual interest on amount for 3 years

=80/100×10/100×100=8%

Amount

=P(1+r/100)^t

=87500(1+8/100)^3

=87500(27/25)^3

≈ 1,10,225

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