Question

Calculate the simple interest and compound interest for a principal of ₹ 20,000 at the rate of 10% per annum for two years.

• A. SI = ₹ 4,000, CI = ₹ 4,250
• B. SI = ₹ 5,250, CI = ₹ 5,000
• C. SI = ₹ 4,000, CI = ₹ 4,000
• D. SI = ₹ 4,000, CI = ₹ 4,200

Answer 1

The correct option is D SI = ₹ 4,000, CI = ₹ 4,200

Given,
P = ₹ 20,000 , T =2 years , R = 10%

Simple Interest:
SI =$\frac{PRT}{100}$ = $\frac{20,000\times 10\times 2}{100}$
= ₹ 4,000

Compound Interest:
For 1st year, the principal is ₹ 20,000.
CI =$\frac{PRT}{100}$ = $\frac{20,000\times 10\times 1}{100}$
= ₹ 2,000
For 2nd year,
principal = ₹ 20,000 + ₹ 2,000
= ₹ 22,000
CI =$\frac{PRT}{100}$ = $\frac{22,000\times 10\times 1}{100}$
= ₹ 2,200
CI for 2 years
= CI for 1st year + CI for 2nd year
= ₹ 2,000 + ₹ 2,200
= ₹ 4,200