# A person deposits Rs. 6500 at 20% rate of interest compounded annually. What is interest received by him at end of two years?

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A person deposits Rs. 6500 at 20% rate of interest compounded annually. What is interest received by him at end of two years?

1. Rs. 2860
2. Rs. 3520
3. Rs. 4720
4. Rs. 5640

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Correct Answer - Option 1 : Rs. 2860

Given:

P = Rs. 6500

R = 20%

N = 2

Formula used:

A = P × (1 + (R/ 100))N

A = P + I

Where, P = Principal amount, R = Rate of interest, N = number of years and I = Simple interest

Calculation:

A = 6500 × (1 + (20/ 100))2

⇒ A = 6500 × 6 × 6/ 25

⇒ A = 260 × 36

⇒ A = 9360

A = P + I

⇒ I = 9360 – 6500

⇒ I = 2860

∴ I = Rs. 2860