Question

# If a sum of ₹ 20,000 is borrowed by Heena for 2 years at an interest of 8% compounded annually, then the amount she has to pay at the end of 2 years is

A

₹ 23,238

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B

₹ 21,238

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C

₹ 23,328

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D

₹ 21,328

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Solution

## The correct option is C ₹ 23,328 We know that S.I. = PRT100 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). Let the principal for the first year be P1. Here, P1 = ₹ 20000 SI1 = Simple Interest at 8% per annum for first year = 20000×8100 = ₹ 1600 Amount at the end of first year = P1 + SI1 = 20,000 + 16,00 = ₹ 21600 This becomes principal for the next year. Interest for the second year = 21600×8100 = ₹ 1728 Total amount to be paid back = ₹ 21600 + ₹ 1728 = ₹ 23,328

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