Question

Simple interest on certain sum at the rate of 10% per annum after 2 years is Rs. 800. Find the compound interest on the sum at the rate of 10% per annum for 2 years.
1. Rs. 850
2. Rs. 900
3. Rs. 880
4. Rs. 840
5. None of these

Answer 1

Correct Answer - Option 4 : Rs. 840

Given:

Simple interest = Rs. 800, at the rate of 10% and time = 2 years

Formula used:

If P = Principal, R = Rate of Interest, and T = Time Period; then:

Simple interest = (P × R × T)/100, and

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

Calculation:

800 = (P × 10 × 2)/100

 ⇒ P = 4,000

Now, C.I = 4,000[(1 + 10/100) - 1] = 4,000 × (21/100) = Rs. 840

∴ Compound interest is Rs. 840