Multiple choice

What is the compound interest on the principal of Rs. 20,000 at the rate of 9% p.a. for a period of 2 years?

  1. Rs. 3,600

  2. Rs. 3,762

  3. Rs. 3,900

  4. Rs. 3,846

  5. Rs. 3,950
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Compound interest = P((1 + r/100)^n - 1). Here, 20000 * ((1.09)^2 - 1) = 20000 * (1.1881 - 1) = 20000 * 0.1881 = 3762.

AI explanation

Using the formula for compound interest for two years, CI = P[(1 + R/100)^2 - 1]. Substituting the given values gives CI = 20000[(1 + 9/100)^2 - 1]. This evaluates to 20000[(1.09)^2 - 1], which is 20000 * 0.1881. Multiplying these values results in Rs. 3762.

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