What is the compound interest on ₹24,000 for 2 years at the rate of 10% per annum, if interest is 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
= 24000 [ 1 + \(\frac{10}{100}\) ]² - 24000
= 24000 [ \(\frac{11}{10}\) × \(\frac{11}{10}\) - 1 ]
= 24000 [ \(\frac{121}{100}\) - 1 ]
= 24000 [ \(\frac{21}{100}\) ]
= Rs. 5040