A sum becomes Rs. 6,050 in 2 years at 10% p.a. What is the compound interest?
1. 5000
2. 1050
3. 2900
4. 6000
1. 5000
2. 1050
3. 2900
4. 6000
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Correct Answer – Option 2 : 1050
Given:
Amount = Rs. 6,050
Time = 2 years
Rate of interest = 10% p.a.
Formula Used:
[(100 + Rate of interest)/100]Time = (Amount/Principal)
Compound Interest = Amount – Principal
Calculation:
Let assume that Principal = x
So,
[(100 + Rate of interest)/100]Time = (Amount/Principal)
⇒ [(100 + 10)/100]2 = (6050/ x)
⇒ (110/100) × (110/100) = (6050/ x)
⇒ (121/100) = (6050/x)
By cross multiplying
⇒ x = 6050 × (100/121)
⇒ x = 5,000
Compound Interest = Amount – Principal
⇒ Compound Interest = 6,050 – 5,000
⇒ Compound Interest = Rs. 1,050
∴ The compound interest is Rs. 1,050
The correct option is 2 i.e. Rs. 1,050