Question

A man deposits $Rs.1200$ in a bank on the $1st$ day of each year. If the bank pays $5\%$ per annum compound interest on deposited sum of money, what will be the amount to his credit on the $10th$ day of the second year?

• A. $Rs.2583$
• B. $Rs.2460$
• C. $Rs.2370$
• D. $Rs.2860$

Answer 1

The correct option is A $Rs.2583$

Given that,

A man deposits $Rs.1200$ on the $1^{st}$ day of each year.

He receives a compound interest at the rate of $5\%$ per annum.

To find out,

The amount he will receive on the ${10}^{th}$ day of the second year.

Now, we know that, for compound interest total amount $=P{(1+\frac{R}{100})}^n$

Here, $P=Rs.1200,R=5\%,n=1year$

Hence, amount $=1200{(1+\frac{5}{100})}^1$

$=1200\left(\frac{21}{20}\right)$

$=60\times 21$

$=Rs.1260$

Now, the man again deposits $Rs.1200$ on the $1^{st}$ day of second year.

Therefore, the principle becomes $(1260+1200)=Rs.2460$

Now, he will receive the interest on this amount for one year.

Hence, $P=Rs.2460,R=5\%,n=1year$

So, amount $=2460{(1+\frac{5}{100})}^1$

$=2460\left(\frac{21}{20}\right)$

$=123\times 21$

$=Rs.2583$

As the interest is compounded annually, the bank will not give the interest for $10$ days.

So, on the ${10}^{th}$ of the second year, the amount remains same.

Hence, $Rs.2583$ will be credited on the ${10}^{th}$ day of the second year.