Question

What will be the compound interest on a sum of ₹7500 at 4% per annum for a period of 2 years, compounded annually?

• A. ₹641
• B. ₹612
• C. ₹650
• D. ₹652

Answer 1

The correct option is B

₹612

Using the formula, $A=P{(1+\frac{r}{100})}^n$ and substituting P = ₹7500, n = 2 years and r = 4% p.a , we have,

$A=₹7500\times (1+\frac{4}{100}{)}^2=₹7500\times \frac{26}{25}\times \frac{26}{25}=₹8112$

We know that, Interest = Amount - Principal
$\therefore$ Compound interest = ₹8112 - ₹7500
= ₹612