A sum of ₹3000 is invested on compound interest (compounded annually) at the rate of interest is 20% per annum. What is the compound interest for 2 years?
Answer & explanation
Correct answer: option 3
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 3000 [ 1 + \(\frac{20}{100}\) ]² - 3000
= 3000 [ \(\frac{6}{5}\) × \(\frac{6}{5}\) - 1 ]
= 3000 [ \(\frac{11}{25}\) ]
= Rs. 1320