Question

Tick the correct answer in each of the following:

The compound interest on Rs 4000 at $10\%$ per annum for 2 years 3 months, compounded annually, is

(a) Rs 916 (b) Rs 900 (c) Rs 961 (d) Rs 896

Answer 1

$\text{Principal (P) = Rs. 4000}\text{Rate (R) =}10\%p.a.\text{Period (n) = 2 years 3 months}=2\frac{1}{4}\text{years}\therefore \text{Amount (A) = P}{(1+\frac{R}{100})}^n=Rs.4000{(1+\frac{10}{100})}^2(1+\frac{10\times 1}{100\times 4})=Rs.4000\times \frac{11}{10}\times \frac{11}{10}\times \frac{41}{40}=Rs.4961\therefore \text{C.I. = A - P = Rs. 4961 - 4000}=Rs.961\left(c\right)$