Question

Find the compound interest calculated annually when sum of Rs. 15000 invested at a rate of interest 20% for two years.
1. Rs. 6200
2. Rs. 7000
3. Rs. 6600
4. Rs. 7200

Answer 1

Correct Answer - Option 3 : Rs. 6600

Given:

Sum = Rs. 15000

Rate of interest = 20%

Time = 2 years

Formula used:

Compound interest = P(1 + R/100)^N - P

Here, P = Principal, R = rate of interest and N = time

Calculation:

Compound interest = P(1 + R/100)N - P

Compound interest = 15000(1 + 20/100)² - 15000

Compound interest = 15000 × 36/25 - 15000 = Rs. 6600

∴ Compound interest earned is Rs. 6600