Question

The Simple interest on a certain sum for 2 years at 20% per annum is Rs. 160. The corresponding compound interest is

• A. Rs. 88
• B. Rs. 176
• C. Rs. 126
• D. Rs. 150

Answer 1

The correct option is B

Rs. 176

Principal, $P=\frac{100\times SI}{r\times n}=\frac{100\times 160}{20\times 2}=Rs.400$

Amount after 2 year on Rs.400 at 20% per annum when interest is compounded annually

$=P(1+\frac{R}{100}{)}^T=400(1+\frac{20}{100}{)}^2=400(\frac{120}{100}{)}^2$

$=\frac{400\times 120\times 120}{100\times 100}=4\times 12\times 12=Rs.576$

Compound Interest = 576 - 400 = Rs.176