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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