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Question

What sum will become Rs 2025 in 2 years at 12.5% per annum compound interest?

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Solution

For a given principle (P) invested at r% for a time period of n years at compound interest per annum given an amount (A)
A=p(1+r100)n

here, A=Rs.2025 r=12.5% n=2year
2025=p(1+12.5100)2

2025=p(11251000)2
2025=p×1.265625

p=26251.265625=1600

Rs.1600 will yield Rs.2025 when invested at 12.5% for 2year compund interest.
Hence, the answer is Rs.1600.

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