Explanation:

Let’s break it down:

- The formula for compound interest:

CI = P [(1 + r/100)^n – 1], where P = Rs18,000, r = 7%, CI = Rs1,260

- Plug in the numbers:

1,260 = 18,000 × [(1 + 0.07)^n – 1]

- Work it out:

[(1.07)^n – 1] = 1,260/18,000 = 0.07

(1.07)^n = 1.07

- What this really means: If (1.07)^n = 1.07, then n = 1

Let’s check the options:

- Option 1: 1 year – That’s exactly what the math says. CORRECT

- Option 2: 2 years – The interest would be much higher than Rs1,260.

- Option 3: 3 years – Same deal, too much interest.

- Option 4: 4 years – Way too much.