Multiple choice

The maturity value of a certain sum after two years at 20% p.a. interest compounded annually is Rs. 14,400. Find the principal amount

  1. Rs. 9000

  2. Rs. 9500

  3. Rs. 10,000

  4. Rs. 10,300

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

A = P(1 + r/100)^n. 14400 = P(1 + 20/100)^2 = P(1.2)^2 = P(1.44). P = 14400 / 1.44 = 10000.

AI explanation

Using the compound interest formula Amount = Principal * (1 + Rate/100)^Time, we set up the equation 14400 = P * (1 + 20/100)^2. This simplifies to 14400 = P * 1.44. Dividing 14400 by 1.44 gives the principal amount of Rs. 10,000.

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