How much amount is received by a person, if he gave a loan of Rs P at the rate of 4r% per annum for 2 years compounded annually?
1. Rs. (r/125)2
2. Rs. P[(1 + r/100)]2
3. Rs. P [1 + (r/25)]2
4. Rs. P(1 + r)2
5. Insufficient data
1. Rs. (r/125)2
2. Rs. P[(1 + r/100)]2
3. Rs. P [1 + (r/25)]2
4. Rs. P(1 + r)2
5. Insufficient data
Correct Answer – Option 3 : Rs. P [1 + (r/25)]2
Given:
Principal = Rs. P
Rate = 4r %
Time = 2 years
Formula used:
A = P [1 + (r/100)]t
Where A, P, t and r is amount, principal, time and rate respectively
Calculation:
A = P [(1 + 4r/100]2
⇒ P [(1 + r/25)]2
∴ The amount received is P [(1 + r/25)]2