Question

The compound interest on $₹50,000$ at $4\%$ per annum for $2$ years compounded annually is

• A. $₹9000$
• B. $₹4080$
• C. $₹4280$
• D. $₹4050$

Answer 1

The correct option is B

$₹4080$

Given

$$\begin{gathered} P=₹50000 \\ R=4\% \\ T=2years \end{gathered}$$

Compound interest is the interest calculated on the principal and the interest accumulated over the previous period. The compound interest formula is given below.

Compound Interest = Amount $-$Principal

Amount $=P{\left(1+\frac{R}{100}\right)}^T$

Amount $=50000{\left(1+\frac{4}{100}\right)}^2$

Amount$=50000{\left(1+\frac{1}{25}\right)}^2$

$$\begin{gathered} =50000\times {\left(\frac{26}{25}\right)}^2 \\ =54080 \end{gathered}$$

Compound interest $=A-P$

Compound interest $=54080-50000$

Therefore,Compound interest$=₹4080$