Question

Compound interest on ₹ 18,000 for $2\frac{1}{2}$ years at 10% per annum, compounded annually is

• A. ₹ 4,900
• B. ₹ 4,749
• C. ₹ 4,869
• D. ₹ 4,722

Answer 1

The correct option is C

₹ 4,869

Here, Principal (P) = ₹ 18,000, Time (n) = $2\frac{1}{2}$ years, Rate of interest (R) = 10% p.a.
For 2 years:

$Amount\left(A\right)=P(1+\frac{R}{100}{)}^n$

=$18000(1+\frac{10}{100}{)}^2$

=$18000(1+\frac{1}{10}{)}^2$
=$18000(\frac{11}{10}{)}^2$

=$18000\times \frac{11}{10}\times \frac{11}{10}$
= ₹ 21,780
Interest for 6 months on ₹ 21,780 at rate of 10% p.a. = $\frac{21780\times 10\times 1}{200}=₹1,089$
Total amount for $2\frac{1}{2}$ years = ₹ 21,780 + ₹ 1089 = ₹ 22,869
Compound Interest (C.I) = A - P = ₹ 22,869 - ₹ 18,000 = ₹ 4,869