Question

The compound interest (in Rs., to the nearest integer) on Rs.8,950 for 2 years at the rate of 9% per annum, compounded annually, is:
1. 1,523
2. 1,683
3. 1,685
4. 1,468

Answer 1

Correct Answer - Option 2 : 1,683

Given:

The principle amount is Rs 8950

The interest rate is 9%

The time period is 2 years

Formula used:

When the interest rate is compounded per year at r%

Total interest rate = [r + r + (r × r)/100]%

Calculations:

Total interest in 2 years = 9 + 9 + (9 × 9)/100 =18.81%

Compound interest on Rs. 8950 = 18.81% of 8950

⇒1683.45

⇒ Rs.1683

∴ The correct choice will be option 2.