Question

Tick (✓) the correct answer:
The compound interest on Rs 5000 at 8% per annum for 2 years, compounded annually, is
(a) Rs 800
(b) Rs 825
(c) Rs 832
(d) Rs 850

Answer 1

(c) Rs. 832

$$\begin{gathered} A=P\mathit{}\times {\left(1+\frac{R}{100}\right)}^n \\ =\mathrm{Rs}.5000\times {\left(1+\frac{8}{100}\right)}^2 \\ =\mathrm{Rs}.5000\times {\left(\frac{108}{100}\right)}^2 \\ =\mathrm{Rs}.5000\times {\left(\frac{27}{25}\right)}^2 \\ =\mathrm{Rs}.5000\times \left(\frac{27}{25}\right)\times \left(\frac{27}{25}\right) \\ =\mathrm{Rs}.\left(8\times 27\times 27\right) \\ =\mathrm{Rs}.5832 \\ \therefore \mathrm{Interest}=\mathrm{amount}-\mathrm{principal}=\mathrm{Rs}(5832-5000)=\mathrm{Rs}832 \end{gathered}$$