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Question

The compound interest on ₹ 50,000 at 4% per annum for 2 years compounded annually is
  1. ₹ 4,280
  2. ₹ 4,050
  3. ₹ 4,000
  4. ₹ 4,080


Solution

The correct option is D ₹ 4,080
Given, principal (P) = ₹ 50000
Rate of interest (R) = 4% per annum
Time period (T) = 2 yrs

We know that amount,
A=P(1+R100)T
A=50000(1+4100)2
=50000(1+125)2=50000×2625×2625=54080

Compound interest, CI = A - P = ₹ 54080 - ₹ 50000 = ₹ 4080

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