Mariya borrowed 16,000 from Joseph at a 5% annual compound interest rate. What amount will she have to pay back at the end of two years and four months ?

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Kerala PSC Common Preliminary Exam (GRADUATE LEVEL) PYP - 37/23
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  1. 17,640
  2. 17,934
  3. 18,228
  4. 17,943

Answer (Detailed Solution Below)

Option 2 : 17,934
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Detailed Solution

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Given:

Principal (P) = 16,000

Rate of interest (R) = 5% per annum

Time (T) = 2 years and 4 months = 2 + (4/12) = 2.3333 years

Formula Used:

Compound Interest formula: A = P(1 + R/100)T

Calculation:

Substituting the given values into the formula:

⇒ A = 16,000(1 + 5/100)2.3333

⇒ A = 16,000(1 + 0.05)2.3333

⇒ A = 16,000(1.05)2.3333

⇒ A = 16,000 × 1.120875

⇒ A = 17,934

The total amount Mariya has to pay back at the end of two years and four months is ₹17,934.

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