Multiple choice

What will be compound interest obtained on amount of Rs. 1800 at the rate of 6 p.c.p.a. for 2 years?

  1. Rs. 222.48

  2. Rs. 220.16

  3. Rs. 224.22

  4. Rs. 226.56
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A Correct answer
Explanation

Compound Interest = P[(1 + r/100)^n - 1]. CI = 1800[(1 + 6/100)^2 - 1] = 1800[(1.06)^2 - 1] = 1800[1.1236 - 1] = 1800 × 0.1236 = Rs. 222.48. The amount after 2 years would be 1800 × 1.1236 = Rs. 2022.48, so interest earned is Rs. 222.48.

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