Find the compound interest on ₹5,50,000 at 7% per annum for 2 years, compounded annually.
Answer & explanation
Correct answer: option 4
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 550000 [ 1 + \(\frac{7}{100}\) ]² - 550000
= 550000 [ \(\frac{107}{100}\) × \(\frac{107}{100}\) - 1 ]
= 550000 [ \(\frac{ 11449 }{10000}\) - 1 ]
= 550000 [ \(\frac{ 1449 }{10000}\) ]
= Rs. 79695