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The compound interest on ₹2,500 after 2 years, at a rate of 6% per annum, compounded annually, will be:
₹318
₹309
₹320
₹322
₹309
Calculate 6% of 2500 for year 1 (150) and add 6% of that interest for year 2 (6% of 150 = 9). Total CI = (150 + 150) + 9 = 309.
Principal P = ₹2500, Rate r = 6% per annum, Time n = 2 years, compounded annually.
CI=P(1+100r)n−P
Calculate 6% of 2500 for year 1 (150) and add 6% of that interest for year 2 (6% of 150 = 9). Total CI = (150 + 150) + 9 = 309.
Many students calculate simple interest (SI=P×r×t/100) instead of compound interest, resulting in 300.
State the Formula
The formula for compound interest is CI=A−P, where the amount A=P(1+r/100)n.
CI=P(1+100r)n−P
Substitute Values
Plugging in the given values: P=2500, r=6, n=2.
A=2500(1+1006)2
Calculate Amount
Calculating the square of 1.06: (1.06)2=1.1236. Then A=2500×1.1236=2809.
A=2500×1.1236=2809
Calculate Interest
Finally, subtract the principal from the amount: CI=2809−2500=309.
CI=2809−2500=309
B is correct because the calculated compound interest after 2 years is ₹309.
This topic is closely related to Simple Interest and Depreciation calculations; remember that for simple interest, you would get ₹300, which is a common distracter.
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