Question

Calculate compound interest on Rs $2000$ for $2$ years at the rate $5\%$

• A. $105$
• B. $200$
• C. $205$
• D. $2205$

Answer 1

The correct option is C $205$

Given: Principal, $P=Rs2000$

Rate, $R=5\%$ per annum

Time, $T=2$ years

When compounded annually, Amount (A) is given by

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

$=2000(1+\frac{5}{100}{)}^2$

$=2000\times \frac{105}{100}\times \frac{105}{100}$

$=\frac{105\times 105}{5}$

$=21\times 105$

$=Rs.2205$

Hence, Compound Interest = Amount - Principal

$=Rs.2205-Rs.2000=Rs.205$