The principal increases by 8% in 2 years at simple rate of interest. At the same rate of interest, find the compound interest on Rs 26,000 after 2 years.
Answer & explanation
Correct answer: option 4
Principal increases by = 8%
Time = 2 year
Rate = \(\frac{Increased \; percentage}{time}\) = \(\frac{8}{2}\) = 4%
Effective rate will be (compound interest) = 4 + 4 + \(\frac{4 × 4}{100}\) = 8.16%
compound interest = 8.16% × 26000 = 2121.6