Question

Mehboob gets Rs. 6050 at end of two years when he invests certain sum of money at compound interest of 10% per annum. Calculate principal invested. 
1. Rs. 5000
2. Rs. 4400
3. Rs. 5700
4. Rs. 4000

Answer 1

Correct Answer - Option 1 : Rs. 5000

Given:

A = Rs. 6050

N = 2

R = 10 %

Formula used:

A = P × (1 + (R / 100))^N

Where, P = Principal amount, R = Rate of interest, N = Number of years

Calculation:

6050 = P × (1 + (10/100))²

⇒ 6050 = P × 11² / 10²

⇒ 6050 = 121 × P/100

⇒ P = 6050 × (100/ 121)

⇒ P = Rs. 5000

∴ Amount invested is Rs. 5000