Question 50

What will Rs. 40,000 amount to in 2 years at the rate of 20% p.a., if interest is compounded yearly?

Solution

If P amount compounded yearly at r % rate of interest for i years ,then amount become

$$P\left(1+\frac{r\ }{100}\right)^i.$$

Here, P=40000 Rs.

r=20%.

i=2 years.

So, The amount will become

$$=40000\left(1+\frac{20\ }{100}\right)^2.$$

$$=40000\left(1.20\right)^2.$$

$$=40000\times1.44.$$

$$=57600.$$

C is correct choice.

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