Question

The compound interest on Rs. $100000$ at $20\%$ per annum for $2$ years $3$ months, compound annually is ________.

• A. Rs. $151200$
• B. Rs. $100000$
• C. Rs. $51200$
• D. Rs. $251200$

Answer 1

Answer: (C)

Rs. $51200$

Given, $P=100000$, $r=0.2$, $n=2+\frac{1}{4}$ (converting $2$ years $3$ months to years) $=n=2.25$

Interest is compounded anually,

For first year $=100000\times 0.2\times 1=20000$

For second year $P_{new}=120000$

Interest $=120000\times 0.2\times 1=24000$

For last $0.02544$ year, $p_{new}=144000$
Interest $=144000\times 0.2\times 0.25=7200$

New amount $=144000+7200=151200$

$\text{Interest}=151200+100000=51200$