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Amita's income in 2019 was ₹21,000. She gets an increment of 10% every year. What was her income in 2021?
₹29,100
₹26,530
₹25,410
₹23,100
₹25,410
Use successive percentage increase: 10% of 21,000 is 2,100 (2020 income = 23,100). Then 10% of 23,100 is 2,310. Add: 23,100 + 2,310 = 25,410.
Initial income P = ₹21,000, Annual growth rate r = 10%, Time period from 2019 to 2021, n = 2 years
A=P×(1+100r)n
Use successive percentage increase: 10% of 21,000 is 2,100 (2020 income = 23,100). Then 10% of 23,100 is 2,310. Add: 23,100 + 2,310 = 25,410.
Many students calculate simple interest (P×2×10% = 4,200) and add to the original, forgetting that increments are compound.
Define Parameters
Identify the principal amount P=21000, growth rate r=10%, and time n=2 years (2021 - 2019).
P=21000,r=10%,n=2
Apply Formula
Use the compound growth formula to determine the income after 2 years.
A=21000×(1+10010)2
Execute Calculation
Calculate the square of 1.1 and multiply by the base amount: 21000×1.21.
A=21000×1.21=25410
C is correct because the compound growth of ₹21,000 at 10% over two years results in a total of ₹25,410.
This concept is identical to compound interest calculations in banking and depreciation in accounting; always use the multiplier (1+r)n for rapid results.
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