Altaf borrowed ₹ 1,00,000 for 3 years from Hitesh at 7% compound interest annually. How much money will he pay to his friend at t…

Question

Altaf borrowed ₹ 1,00,000 for 3 years from Hitesh at 7% compound interest annually. How much money will he pay to his friend at the end of 3 years?

1. A. ₹ 1,22,504.30 (Correct answer)
2. B. ₹ 1,34,570.00
3. C. ₹ 1,25,678.90
4. D. ₹ 1,26,678.30

Correct Answer

Option A — ₹ 1,22,504.30

Detailed Solution & Explanation

The correct answer is ₹ 1,22,504.30.

Key Points

• Compound interest amount: A = P(1 + R/100)ⁿ.
• Substituting P = 1,00,000, R = 7 and n = 3: A = 1,00,000 × (1.07)³.
• (1.07)³ = 1.225043, so A = ₹ 1,22,504.30.

Additional Information

• Year by year: 1,00,000 → 1,07,000 → 1,14,490 → 1,22,504.30, which is a useful check on the exponent.
• Total interest is ₹ 22,504.30, against simple interest of only ₹ 21,000 — the gap is the interest earned on interest.
• Other forms: for half-yearly compounding use R/2 and 2n; for quarterly, R/4 and 4n.