Question

Rs. 30250 is received when a certain sum of money is kept at the rate of 10% compounded annually for two years. What will be the amount received if the same sum is kept at 5% rate of compound interest for two years?
1. Rs. 27782.5
2. Rs. 24562.5
3. Rs. 27562.5
4. Rs. 275625

Answer 1

Correct Answer - Option 3 : Rs. 27562.5

Given:

Amount = 30250

Rate of interest = 10%

Number of years = 2

Formula required:

Amount = P(1 + r/100)²

Compound interest = P[(1 + r/100)² - 1)]

Calculations:

30250 = P(1 + 10/100)² 

⇒ 30250 = P(11/10)² 

⇒ 30250 = P(121/100) 

⇒ 30250 = P(121/100)

⇒ P = 30250 × 100/121

⇒ P = 25000

If Rate of interest is 5%

Amount = 25000(1 + 5/100)²

⇒ 25000(105/100)² = 27562.5

∴ The required amount is 27562.5