Multiple choice

Simple interest on a sum at 4% per annum for 2 years is Rs. 80. Find the compound interest on the same sum for the same time and same rate.

  1. $82.60$
  2. $84.60$
  3. $86.80$
  4. $81.60$
  5. $None of these$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Simple interest for 2 years at 4% is Rs. 80, so annual interest = Rs. 40. Principal = 40 / 0.04 = Rs. 1000. Compound interest for 2 years at 4%: Year 1 interest = 1000 × 0.04 = 40, Year 2 interest = (1000 + 40) × 0.04 = 41.60. Total CI = 40 + 41.60 = Rs. 81.60. This matches option D exactly.

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