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What would be the interest accrued in two years if Rs. 1200 is invested @ 10% interest, compounded annually?
1. Rs. 264
2. Rs. 246
3. Rs. 240
4. Rs. 252

1 Answer

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Correct Answer - Option 4 : Rs. 252

GIVEN:

Principal (P)= Rs1200, Rate(R) = 10%, Time(N) = 2 years

FORMULA USED:

A = P (1 + R/100)N

CALCULATION:

A = P (1 + R/100)N

⇒ A = 1200(1 + 10/100)2

⇒ A = 1200(1 + 1/10)10

⇒ A = 1200 × 11/10 × 11/10

⇒ A = 12 × 121

⇒ A = Rs1452

⇒ Amount = Principle + Interest

⇒ Interest = Amount - Principle

⇒ Interest =Rs1452 - Rs1200

⇒ Interest = Rs252
 
∴ Interest on sum of Rs1200 at the rate of 10% for 2 years = Rs252

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