What will be the compound interest accrued on a sum of Rs 64000 at the rate of 5% per annum in 2 years compounded annually?
Answer & explanation
Correct answer: option 4
Compound Interest = Amount - Principal
Amount = P$(1 + \frac{R}{100})^t$
here, P = Rs 64,000. R = 5%, t = 2 years
⇒ Amount = 64000$(1 + \frac{5}{100})^2$
= 64000$(\frac{21}{20})^2$
= 64000 $\frac{441}{400}$
= 70,560
Compound Interest = 70,560 - 64,000 = Rs 6,560