Question

A sum of Rs. $500$/- was lent for two years at $2\%$ compound interest. The interest for two years will be

• A. Rs. $20$
• B. Rs. $25$
• C. Rs. $50.20$
• D. Rs. $20.20$

Answer 1

The correct option is D Rs. $20.20$

$CI=P{(1+\frac{R}{100})}^T-P$

$=500{(1+\frac{2}{100})}^2-500$

$=500(1+0.02{)}^2-500$

$=500(1.02{)}^2-500$

$=500\left(1.0404\right)-500$

$=520.20-500$

$=Rs.20.20$