Question:
Tick (✓) the correct answer:
The compound interest on Rs 5000 at 8% per annum for 2 years, compounded annually, is
(a) Rs 800
(b) Rs 825
(c) Rs 832
(d) Rs 850
Solution:
(c) Rs 832
$A=P \times\left(1+\frac{R}{100}\right)^{n}$
$=$ Rs. $5000 \times\left(1+\frac{8}{100}\right)^{2}$
$=$ Rs. $5000 \times\left(\frac{108}{100}\right)^{2}$
$=$ Rs. $5000 \times\left(\frac{27}{25}\right)^{2}$
$=$ Rs. $5000 \times\left(\frac{27}{25}\right) \times\left(\frac{27}{25}\right)$
$=$ Rs. $(8 \times 27 \times 27)$
$=$ Rs. 5832
$\therefore$ Interest $=$ amount $-$ principal $=$ Rs $(5832-5000)=$ Rs 832
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