If ₹12000 is invested for two years at compound interest (compounded annually) at the rate of 20% per annum, then what is the interest?

₹5280 ₹4280 ₹4800 ₹5640

₹5280

From the formula for compound interest, we know, C.I = P(1+$\frac{R}{100})^t$– P  = 12000 [ 1 + \(\frac{20}{100}\) ]²  - 12000  = 12000 [ \(\frac{6}{5}\) × \(\frac{6}{5}\)  - 1 ]  = 12000[ \(\frac{11}{25}\)  ] = Rs. 5280