Question

On what sum will the compound interest at 10% per annum for 2 years compounded annually be Rs. 756?
1. Rs. 3600
2. Rs. 2950
3. Rs. 3750
4. Rs. 2800

Answer 1

Correct Answer - Option 1 : Rs. 3600

Given:

Rate = 10% per annum

Compound Interest = Rs. 756

Time 2 years

Formula used:

Compound Interest = P{1 + (Rate/100)}^Time - P

Where, P = Principal

Calculation:

By the using formula,

Compound Interest = P{1 + (Rate/100)}Time - P

⇒ 756 = P{1 + (10/100)}² - P

⇒ 756 = P{(11/10)² - 1}

⇒ 756 = P × (21/100)

⇒ P = 36 × 100 = 3600

∴ The Principal is Rs. 3600