Question

You deposit ₹ 400 in a bank account at $5\%$ interest compunded annually. How much amount would you have obtained after 2 years?

• A. ₹ 420
• B. ₹ 430
• C. ₹ 441
• D. ₹ 461

Answer 1

The correct option is C ₹ 441

Interest for 1${}^{st}$ year:
$I=\frac{P\times 1\times R}{100}$

$I=\frac{400\times 1\times 5}{100}$

$I=₹20$

Amount after 1 year
= ₹ 400 + ₹ 20
= ₹ 420

Interest after 2${}^{nd}$ year:
$I=\frac{P\times 1\times R}{100}$

$I=\frac{420\times 1\times 5}{100}$

$I=₹21$

Amount after 2${}^{nd}$ year
= ₹ 420 + ₹ 21
= ₹ 441