What is the compound interest for 2 years on a sum of ₹7,200 at the rate of 15% per annum, if interest is compounded annually?
Answer & explanation
Correct answer: option 2
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 7200 [ 1 + \(\frac{15}{100}\) ]² - 7200
= 7200 [ \(\frac{23}{20}\) × \(\frac{23}{20}\) - 1 ]
= 7200 [ \(\frac{529}{400}\) - 1 ]
= 7200 [ \(\frac{129}{400}\) ]
= Rs. 2322