Question

The compound interest on $50,000$ at $4\%$ per annum for $2$ years compounded annually is

• A. $Rs.$ $4,000$
• B. $Rs.$ $4,080$
• C. $Rs.$ $4,280$
• D. $Rs.$ $4,050$

Answer 1

Answer: (B)

$Rs.$ $4,080$

We have,

$P=Rs.50,000$

$T=2years$

$R=4\%$

$C.I=?$
We know that

$A=P{(1+\frac{R}{100})}^T$

$A=P+C.I$

Therefore,

$50000+C.I=50000{(1+\frac{4}{100})}^2$

$C.I=50000{(1+\frac{1}{25})}^2-50000$

$C.I=50000{\left(\frac{26}{25}\right)}^2-50000$

$C.I=50000\times (\frac{26}{25}\times \frac{26}{25})-50000$

$C.I=80\times 26\times 26-50000$

$C.I=54080-50000$

$C.I=Rs.4080$

Hence, this is the answer.