Multiple choice

Find the compound interest at a rate of 5% per annum for 2 years on a certain principal, which in 2 years at a rate of 4% per annum, gives Rs. 800 as simple interest.

  1. Rs. 3,076

  2. Rs. 1,036

  3. Rs. 1,025

  4. Rs. 1,507

  5. Rs. 1,027
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Simple interest: 800 = P * 0.04 * 2 => P = 800 / 0.08 = 10000. Compound interest on 10000 at 5% for 2 years: 10000 * (1.05^2 - 1) = 10000 * (1.1025 - 1) = 1025.

AI explanation

First, find the principal by rearranging the simple interest formula: Principal = (Simple Interest * 100) / (Rate * Time), which gives (800 * 100) / (4 * 2), equaling Rs. 10000. Next, apply the two-year compound interest formula: CI = P * R * (200 + R) / 10000. Substituting the values gives 10000 * 5 * 205 / 10000, which results in a compound interest of Rs. 1025.

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