Multiple choice

Vipul invested a certain amount at the rate of 9 p.c.p.a. for 5 years and obtained simple interest of Rs. 4275. If the same amount is invested at the same rate of interest for 2 years, what will be compound interest at the end of 2 years?

  1. Rs. 1786.95

  2. Rs. 1748.55

  3. Rs. 1756.85

  4. Rs. 1726.25

  5. None of these

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A Correct answer
Explanation

Using SI = P x R x T, where P is principal, R is rate (9%), and T is time (5 years): 4275 = P x 0.09 x 5, so P = 4275/0.45 = Rs. 9500. For compound interest: Amount = P(1 + r)^n = 9500(1 + 0.09)^2 = 9500 x 1.09 x 1.09 = Rs. 11286.95. CI = Amount - Principal = 11286.95 - 9500 = Rs. 1786.95. The key is finding principal from simple interest first, then applying compound interest formula.