What will be the compound interest on a sum of ₹4,50,000 at the rate of 10% per annum in 2 years, if interest is compounded annually?
Answer & explanation
Correct answer: option 2
From the formula for compound interest, we know,
C.I = P(1+$\frac{R}{100})^t$– P
= 450000 [ 1 + \(\frac{10}{100}\) ]²- 450000
= 450000[ \(\frac{121}{100}\) - 1 ]
= 450000[ \(\frac{21}{100}\) ]
= Rs. 94500