The principal increases by 10% in 2 years at simple rate of interest. At the same rate of interest, find the compound interest on Rs.13,000 after 2 years.
Answer & explanation
Correct answer: option 1
Principal increases by = 10%
Time = 2 year
Rate = \(\frac{Increased \; percentage}{time}\) = \(\frac{10}{2}\) = 5%
Effective rate will be (compound interest) = 5 + 5 + \(\frac{5 × 5}{100}\) = 10.25%
compound interest = 10.25% × 13000 = 1332.5