Question

Dinesh borrowed ₹ 20,000 for 2 years at 10% per annum compound interest. Calculate the interest paid by him for the second year.

• A. ₹ 2000
• B. ₹ 2100
• C. ₹ 2200
• D. ₹ 2400

Answer 1

The correct option is C

₹ 2200

We know that S.I. = $\frac{PRT}{100}$

where, S.I. is the simple interest, P is the principal, R is the rate of interest per annum and T is the time(number of years).

For the 1st year:
Principal = ₹ 20,000, Rate =10% p.a., Time = 1 year
$\therefore \text{Interest}=\frac{20000\times 10\times 1}{100}=200\times 10=₹2000$
$\therefore$ Amount at the end of 1st year
= ₹ (20000+2000) = ₹ 22000

For the 2nd year:
P= ₹ 22,000, R= 10% p.a., T= 1 year
$\therefore \text{Interest}=\frac{22000\times 10\times 1}{100}=220\times 10=₹2200$
Thus interest paid for the second year = ₹ 2200