Question

The compound interest on Rs. 5000 at 10% per annum for 2 years is 

A. Rs. 550 

B. Rs. 1050 

C. Rs. 950 

D. Rs. 825

Answer 1

Present value = Rs.5000 

Interest rate = 10% per annum 

Time = 2 years 

Amount (A) = P (1 + R/100)ⁿ [Where, P = Present value 

R = Annual interest rate 

n = Time in years] 

∴ A = 5000 (1 + 10/100)² 

⇒ A = 5000 (1 + 1/10)² 

⇒ A = 5000 (11/10)² 

⇒ A = 5000 × 11/10 × 11/10 

⇒ A = 5000 × 121/100 

⇒ A = 50 × 121 

⇒ A = 6050 

∴ Amount = Rs.6050 

∴ Compound interest = Rs.(6050 – 5000) 

= Rs.1050