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The simple interest (p.a.) accrued on an amount of Rs 17,000 at the end of four years is Rs 6,800. What would be the compound interest (compounded annually) accrued on the same amount at the same rate after two years?
  • a)
    Cannot be determined
  • b)
    Other than those given as option
  • c)
    Rs 3570
  • d)
    Rs 3260
  • e)
    Rs 3980
Correct answer is option 'C'. Can you explain this answer?
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The given information:
- Principal amount (P) = Rs 17,000
- Simple Interest (SI) = Rs 6,800
- Time (t) = 4 years

To find:
Compound Interest (CI) after 2 years

Formula:
Compound Interest (CI) = P * (1 + r/n)^(n*t) - P
Where:
- P is the principal amount
- r is the rate of interest (in decimal form)
- n is the number of times interest is compounded per year
- t is the time in years

Step-by-step solution:

1. First, we need to find the rate of interest (r) for compound interest.
We can use the formula for simple interest to find the rate:
SI = P * r * t
6,800 = 17,000 * r * 4
r = 6,800 / (17,000 * 4)
r = 0.1

2. Now, we can calculate the compound interest after 2 years using the compound interest formula.
CI = P * (1 + r/n)^(n*t) - P
CI = 17,000 * (1 + 0.1/1)^(1*2) - 17,000
CI = 17,000 * (1.1)^2 - 17,000
CI = 17,000 * 1.21 - 17,000
CI = 20,570 - 17,000
CI = 3,570

Therefore, the compound interest (compounded annually) accrued on the same amount after two years is Rs 3,570. So, the correct answer is option C.
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The simple interest (p.a.) accrued on an amount of Rs 17,000 at the end of four years is Rs 6,800. What would be the compound interest (compounded annually) accrued on the same amount at the same rate after two years?a)Cannot be determinedb)Other than those given as optionc)Rs 3570d)Rs 3260e)Rs 3980Correct answer is option 'C'. Can you explain this answer?
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