Question

What is the compound interest earned on a principal of ₹ 5000 at the rate of 20% p.a in 2 years?

• A. ₹ 9740
• B. ₹ 6740
• C. ₹ 2200
• D. ₹ 8740

Answer 1

The correct option is C

₹ 2200

$\text{Given: Principal, P =}₹5000\text{rate of interest, r =}20\%,\text{and time period, n = 2 years.}$

$\text{We know that, Amount,}$

$A=P(1+\frac{R}{100}{)}^n$

$A=5000{[1+\frac{20}{100}]}^2=₹7200$

$\text{So, compound interest,}\text{CI = Amount - Principal}\Rightarrow CI=₹7200-₹5000=₹2200$