# What will be the compound interest on a sum of ₹ 45,000 at compound interest compounded annually at 8% per annum in two years?

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What will be the compound interest on a sum of ₹ 45,000 at compound interest compounded annually at 8% per annum in two years?

1. Rs. 7466
2. Rs. 7588
3. Rs. 7355
4. Rs. 7488

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Correct Answer - Option 4 : Rs. 7488

Given:

Principal = Rs. 45,000

Rate = 8%

Time = 2 years

Calculation:

CI = P(1 + R)n – P

⇒ 45,000(1 + 8/100)2 – 45000

⇒ 45000(27/25)2 – 45000

⇒ 45000(729/625 – 1)

⇒ 45000 × 104/625

⇒ Rs.7488

∴ the compound interest is Rs. 7488.