Correct Answer - Option 1 : Rs. 220.50

**Given**

Sum of money(P) = Rs. 1050

Rate of interest(r) = 10% p.a.

Time(n) = 2 years

**Formula used**

Compound interest(CI) = Amount(A) - Principal(P)

Amount(A) = Principal × [1 + r/100]n

**Calculation**

A = P × [1 + r/100]n

⇒ A = 1050 × [1 + 10/100]^{2}

⇒ A = 1050 × [11/10]^{2}

⇒ A = 1050 × 121/100 = Rs 1270.50

⇒ CI = A - P = 1270.50 - 1050

⇒ CI = Rs 220.50