What will be the compound interest on a sum of Rs. 25,000 after 3 years at the rate of 12 percent per annum, compounded annually?

Introduction / Context:
Here we have a standard compound interest question with a relatively higher rate of 12 percent per annum and a principal of Rs. 25,000. We are asked to find the compound interest after 3 years. This tests accurate use of the compound interest formula and careful handling of decimal multipliers. Such questions are common in banking and finance related aptitude sections.

Given Data / Assumptions:

• Principal P = Rs. 25,000.
• Rate r = 12 percent per annum.
• Time n = 3 years.
• Compounding is annual.
• We need the compound interest, that is total amount minus the principal.

Concept / Approach:
We use the standard compound amount formula: A = P * (1 + r/100)^n Then we find the compound interest as: CI = A - P Substituting P = 25000, r = 12, and n = 3, we compute the growth factor and multiply accordingly to get the final amount and then the interest.

Step-by-Step Solution:
P = 25000, r = 12 percent, n = 3 years A = 25000 * (1 + 12/100)^3 1 + 12/100 = 1.12 (1.12)^3 = 1.12 * 1.12 * 1.12 First (1.12)^2 = 1.2544 Then (1.12)^3 = 1.2544 * 1.12 = 1.404928 A = 25000 * 1.404928 = 35123.20 CI = A - P = 35123.20 - 25000 = 10123.20 Therefore, the compound interest is Rs. 10123.20

Verification / Alternative check:
We can approximate to verify. Using rounded factor 1.40 instead of 1.404928, we get: A ≈ 25000 * 1.40 = 35000 Approximate CI ≈ 10000 This is close to the exact result 10123.20, so our detailed calculation is reasonable. The more precise multiplication confirms the exact value given by option A.

Why Other Options Are Wrong:
Rs. 12100, Rs. 12552, Rs. 12665, and Rs. 13000 do not match the exact compound interest computed from the formula. Some of these values could correspond to different rates or times, but not to 12 percent for 3 years on Rs. 25,000. Only Rs. 10123.20 equals 35123.20 minus 25000 and matches the calculation precisely.

Common Pitfalls:
Errors often occur when computing the cube of 1.12 or when rounding intermediate results too aggressively. Students may also mistakenly use simple interest or only compound for 2 years instead of 3. Another common issue is writing the amount instead of the interest when selecting the answer. Systematically applying the formula, double checking the exponent, and clearly separating amount and interest prevent these mistakes.

Final Answer:
The compound interest on Rs. 25,000 after 3 years at 12 percent per annum is Rs. 10,123.20.