Question

What principal will amount to ₹38,976 in two years, if the rates of interest for successive years are $16\%$ and $20\%$respectively?

• A. ₹32000
• B. ₹30000
• C. ₹28000
• D. ₹26000

Answer 1

The correct option is C ₹28000

Let the principal amount be P.
Formula for the calculation of amount to be paid for successive rate of interest is :
$A=Principal\times \frac{100+R_1}{100}\times \frac{100+R_2}{100}$
On using above formula, the amount after 2 years is:
$338976=P\times \frac{100+16}{100}\times \frac{100+20}{100}$

$38976=P\times \frac{116}{100}\times \frac{120}{100}$
$\Rightarrow 38976=1.392P$
$\Rightarrow P=₹28000$