A sum invested at compound interest (compounded annual) amounts to ₹750 at the end of first year and ₹900 at the end of second year. What is the sum?
Answer & explanation
Correct answer: option 2
Difference in compound interest of 1st and 2nd year = 900 - 750
= Rs. 150
Rate of interest = \(\frac{150}{750}\) × 100%
= 20%
Now,
Amount = P$(1 \;+\; \frac{R}{100})^t$
750 = P [ 1 + \(\frac{20}{100}\) ]
750 = P [ \(\frac{6}{5}\) ]
P = Rs. 625