Join 60,000+ competitive exam aspirants
or with email
Your Cart
SubtotalтВ╣0
TotalтВ╣0
Examoogle тАв User тАв info@examoogle.com тАв EE-2024-8821
Chapter 1 of 12 тАв Page 1 of 248ЁЯФТ Protected PDF тАв Watermarked
Join 60,000+ competitive exam aspirants
The compound interest on Rs. 2000 at 10% per annum for 2 years is:
Rs. 400
Rs. 420
Rs. 440
Rs. 410
Rs. 420
Compound interest is calculated by adding the interest earned in the first period to the principal, effectively charging interest on the initial interest. For a principal of Rs. 2000 at 10% per annum over 2 years, the total amount accumulates to Rs. 2420, making the interest Rs. 420.
Compound interest is calculated by adding the interest earned in the first period to the principal, effectively charging interest on the initial interest. For a principal of Rs. 2000 at 10% per annum over 2 years, the total amount accumulates to Rs. 2420, making the interest Rs. 420.
Think of compound interest like a snowball rolling down a hill; as it rolls, it picks up more snow, making it grow faster with every turn because the new size includes the snow picked up in previous turns.
A=P(1+100rтАЛ)n тАФ Formula to calculate the total accumulated amount
CI=P[(1+100rтАЛ)nтИТ1] тАФ Formula to calculate compound interest directly
The principle relies on the exponential growth model where the base amount increases each compounding period. The formula used is A=P(1+100rтАЛ)n, where A is the final amount, P is the principal, r is the rate, and n is the number of years. Subtracting the principal from the total amount yields the compound interest (CI=AтИТP).
Simple interest remains constant for every year as it is calculated only on the initial principal.
Compound interest increases over time as the base for calculation grows.
Compounding frequency (annually, semi-annually, quarterly) significantly changes the final outcome.
Reflects the true time value of money
Encourages long-term investment growth
Results in higher repayment costs for loans compared to simple interest
Calculations become complex with non-annual compounding periods
Savings account growth calculations
Debt and loan repayment schedules
For Simple Interest: SI=100P├ЧR├ЧTтАЛ=1002000├Ч10├Ч2тАЛ=Rs.400.
Option A represents Simple Interest for 2 years, which is incorrect for Compound Interest.
B is correct тАФ The compound interest on Rs. 2000 at 10% for 2 years is Rs. 420.
Always differentiate between Simple and Compound interest in your head: Simple is linear (y=mx), while Compound is exponential (y=abx).
Get instant step-by-step AI explanations, full shift Previous Year Papers (SSC GD, RRB, SSC JE), and regional rank analysis on the official Examoogle App.
Free Download тАв 100K+ Aspirants