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Question 3
The compound interest on Rs 50,000 at 4% per annum for 2 years compounded annually is
(a) Rs 4,000
(b) Rs 4,080
(c) Rs 4,280
(d) Rs 4,050

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Solution

Given, principal (P) = Rs. 50000
Rate of interest (R%) = 4% per annum
Time period (T) = 2 yr We know that,
A=P(1+R100)TA=50000(1+4100)2=50000(1+125)2=50000×2625×2625=80×26
Compound interest, CI = A - P = Rs 54080 - Rs 50000 = Rs 4080
Hence, option (b) is correct.

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