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?

₹1360 ₹1200 ₹1320 ₹1440

₹1320

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