Multiple choice

Rs. 5,000 are invested in a scheme of compound interest. If the rate of interest is 12% per annum, then what is the interest earned (in Rs.) in 2 years?

  1. 1450

  2. 1272

  3. 1520

  4. 3450
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

CI = P * ((1 + r/100)^n - 1) = 5000 * ((1.12)^2 - 1) = 5000 * (1.2544 - 1) = 5000 * 0.2544 = 1272.

AI explanation

Using the compound interest amount formula A = P(1 + R/100)^n, the amount after two years is 5000(1 + 12/100)^2. This evaluates to 5000(1.12)^2, which equals 5000 * 1.2544 = 6272. The interest earned is the total amount minus the principal, so 6272 - 5000 = 1272.

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