Question

Mohit borrowed Rs.5000  for 2 years. What will be the compound interest if the rate of interest for first year is 2% per annum, and last year is 5% per annum respectively?

1. 355
2. 266
3. 388
4. 299

Answer 1

Correct Answer - Option 1 : 355

Given

Mohit borrowed Rs.5000  for 2 years

Rate is given for 2 different year is 2% and 5%

Formula used

Amount = P(1 + R / 100)^T

P = Principal

R = Rate

T = Time

Calculation

Amount = 5000(1 + 2/100)

⇒ Amount = 5000 × 102 / 100

⇒ Amount = Rs5100

⇒ 5100(1 + 5 / 100)

⇒ 5100( 105 / 100

⇒ Rs.5355

∴ Compound Interest = 5355 - 5000

∴ Compound Interest after 2 year is Rs.355