What will be the compound interest on a sum of Rs. 1000 at the annual rate of 10% for 2 years?
1. Rs. 200
2. Rs. 220
3. Rs. 210
4. Rs. 190
1. Rs. 200
2. Rs. 220
3. Rs. 210
4. Rs. 190
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Correct Answer – Option 3 : Rs. 210
Concept: Compound Interest = Amount – Principle
where Amount = P(1 + R/100)n
Solution:
Given: Principle = 1000
Rate = 10%
Time = 2 years
Using the above formula, we get,
CI = 1000(1 + 10/100)2 – 1000
10000(121/100) – 1000
1210 – 1000 = 210
Hence, we conclude that the compound interest is 210.