Question

If Satish borrows a sum of ₹ 15,000 for 2 years at an interest of 15%, compounded annually, then the amount he has to pay at the end of 2 years is

• A. ₹ 22,522.5
• B. ₹ 21,522.5
• C. ₹ 20,522.5
• D. ₹ 19,837.5

Answer 1

The correct option is D

₹ 19,837.5

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).

Let the principal for the first year be $P_1$. Here, $P_1$ = ₹ 15000

$S{I}_1$ = Simple Interest at 15% per annum for first year = $\frac{15000\times 15}{100}$ = ₹ 2250

Amount at the end of first year
= $P_1$ + $S{I}_1$
= 15,000 + 2,250 = ₹ 17,250
This becomes principal for the next year.

Interest for the second year
= $\frac{17250\times 15}{100}$ = ₹ 2587.5

Total amount to be paid back
= ₹ 17250 + ₹ 2587.5 = ₹ 19,837.5