Question 56

The compound interest (compounded annually) on a sum of money invested for two years is ₹10125. If the rate of interest is 25% per annum, then what is the amount after these two years?

Solution

Amount = P$$(1 + \frac{r}{100})^n$$

where 

P = Principal

r = rate of interest

n = number of years

P$$(1 + \frac{r}{100})^n$$ - P = Compound Interest

P($$(1 + \frac{r}{100})^n$$ - 1) = Compound Interest

P($$(1 + \frac{25}{100})^2$$ - 1) = 10125

$$P((1+\frac{1}{4})^2-1)=10125$$

$$P\left(\frac{25}{16}-1\right)=10125$$

$$\frac{9P}{16}=10125$$

P = 18000

Amount after 2 years = 18000 + 10125 = 28125

So, the answer would be option a)28125.


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