What is the compound interest on ₹10,625 for 2 years at 8% interest per annum, if interest is compounded annually?
Answer & explanation
Correct answer: option 1
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 10625 [ 1 + \(\frac{8}{100}\) ]² - 10625
= 10625 [ \(\frac{27}{25}\) × \(\frac{27}{25}\) - 1 ]
= 10625 [ \(\frac{729}{625}\) - 1 ]
= 10625 [ \(\frac{104}{625}\) ]
= Rs. 1768