Multiple choice

The amount becomes Rs. 1,323 in two years at 5% p.a. if interest is compounded annually. The amount invested will be

  1. Rs. 1,260

  2. Rs. 588

  3. Rs. 1,200

  4. Rs. 882

  5. Rs. 846.72
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Using the compound interest formula A = P(1 + r/100)^n, we have 1323 = P(1 + 5/100)^2. This simplifies to 1323 = P(1.05)^2 = P(1.1025). P = 1323 / 1.1025 = 1200.

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