Correct Answer - Option 1 : 2

**Given:**

Principal = Rs. 5000

Rate of Interest = 4%

CI = Rs. 408

**Formula:**

Amount = P(1 + R/100)^{n}

Amount = P + Interest

Here, P = Principal, R = Rate, n = Time

**Calculations:**

Amount = 5000 + 408 = Rs. 5408

Let the time period = n years

⇒ 5000(1 + 4/100)^{n} = 5408

⇒ (1 + 4/100)^{n} = 5408/5000

⇒ (1 + 4/100)^{n} = 2704/2500

⇒ (52/50)^{n} = (52/50)^{2}

⇒ n = 2 years

**∴**** Required time period is 2 years.**