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Find the compound interest on ₹13,000 in 2 years at 4% p.a., interest compounded yearly.
₹1,060.80
₹996.50
₹997.60
₹1,086.60
₹1,060.80
Use the multiplier method for 2 years: Interest = P×(2r+r2/100) where r=4. So, 13000×(0.08+0.0016)=13000×0.0816=1060.8.
Principal P = ₹13,000, Rate R = 4% p.a., Time n = 2 years
CI=P×(1+100R)n−P
Use the multiplier method for 2 years: Interest = P×(2r+r2/100) where r=4. So, 13000×(0.08+0.0016)=13000×0.0816=1060.8.
Many students calculate simple interest (P×R×T/100) instead of compound interest, leading to the wrong result of ₹1,040.
Identify given variables
Given principal P=13000, rate R=4%, and time n=2 years.
P=13000,R=4,n=2
Calculate the Amount
Using the compound interest formula for Amount A=P(1+R/100)n.
A=13000×(1+0.04)2=13000×(1.04)2=13000×1.0816=14060.8
Calculate Compound Interest
Subtract the principal from the total amount: CI=A−P.
CI=14060.8−13000=1060.8
A is correct because the compound interest on ₹13,000 for 2 years at 4% p.a. is calculated as ₹1,060.80.
For compound interest problems with 2 years, the formula CI=P×(2r/100+r2/1002) is significantly faster for mental calculations.
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