Question

A certain sum amounts to Rs. 6760 in 2 years at 4% per annum compound interest. Find the sum.
1. Rs. 6250
2. Rs. 5670
3. Rs. 4523
4. Rs. 5689

Answer 1

Correct Answer - Option 1 : Rs. 6250

Given

Amount = Rs 6760

Time = 2 years

Rate = 4% per annum

Formula used

A = P(1 + r%)^t

Where A, P, r and t are amount, principal, rate and time respectively.

Calculation

6760 = P[1 + (4/100)]²

⇒ 6760 = P (104/100)²

⇒  (6760 × 100 × 100)/(104 × 104) = P

⇒ 6250 = P

∴ Principal is Rs.6250