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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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