Multiple choice

Rajat invested a certain amount of money at compound interest. The money increased to Rs. 2600 after the end of the first year and to Rs. 2,704 after the end of the second year. The invested amount of money was

  1. Rs. 2300

  2. Rs. 2350.50

  3. Rs. 2400

  4. Rs. 2500

  5. Rs. 2550.50
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For compound interest, the amount after 2 years is A2 = P(1+r)^2 and after 1 year is A1 = P(1+r). Thus, (1+r) = A2/A1 = 2704/2600 = 1.04. P = A1 / 1.04 = 2600 / 1.04 = 2500.

AI explanation

The interest earned in the second year is 2704 - 2600, which equals Rs. 104. Using this to find the rate, we have Rate = (104 * 100) / 2600, which equals 4% per annum. The initial principal is the first year's amount minus the first year's interest, so Principal = 2600 / (1 + 4/100), which equals 2600 / 1.04, giving Rs. 2500.

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