Swati took a loan of Rs 16000 against her insurance policy at the rate of

Given:

$\mathrm{P}=$ Rs 16,000

$\mathrm{R}=12.5 \%$ p. a.

$\mathrm{n}=3$ years

We know that:

$\mathrm{A}=\mathrm{P}\left(1+\frac{\mathrm{R}}{100}\right)^{\mathrm{n}}$

$=16,000\left(1+\frac{12.5}{100}\right)^{3}$

$=16,000(1.125)^{3}$

$=\operatorname{Rs} 22,781.25$

Now,

$\mathrm{CI}=\mathrm{A}-\mathrm{P}$

$=\mathrm{Rs} 22,781.25-\mathrm{Rs} 16,000$

$=\mathrm{Rs} 6,781.25$