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### Question

When a certain amount is invested in a simple interest scheme, it increases by 50% in 5 years. What will be compound interest after 3 years on an amount of Rs. 2000, at the same interest rate, and annual compounding?

**A**

Rs. 662.

**B**

Rs. 762.

**C**

Rs. 562.

**D**

Rs. 862.

**Soln.**

**Ans: a**

Simple interest on Rs. 100 in 5 years is Rs. 50, so rate is 50/5 = 10%. Compound interest for 3 years would be 2000 × $(1 + 10/100)^3$ = 2000 × $(11/10)^3$ = $(2000 × 11 × 11 × 11)/1000$ = Rs. 2662. Interest = A - P = 2662 - 2000 = Rs. 662.