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Discussion :: Compound Interest

  1. The simple interest on a certain sum of money at rate of interest 5% per annum for 2 years is Rs. 500. What is the compound interest on the same sum for the same period and at the same rate of interest?

    2. A.
    Rs.412.5
    B.
    Rs.400
    C.
    Rs.500
    D.
    Rs.512.5

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    Answer : Option D

    Explanation :

    S.I. = 500

    r = 5%

    t = 2 years

    Before finding C.I. we have to find the sum or principal;

    Apply formula; Principal =
    Principal = = Rs. 5000

    Now we have to find the Amount;

    Apply formula; Amount =

    Amount = 5000

    Apti Compound interest

    = 5000 * 1.05 * 1.05 = Rs. 5512.5

    C.I. = Amount - Principal

    C.I. = 5512.5 - 5000 = Rs. 512.5 (Option D)

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