Multiple choice

Manu invested a certain amount at the rate of 6% per annum for 7 years to obtain an amount of Rs.24850 on simple interest. How much amount did Manu obtain as compound interest in 2 years at the same sum and rate of interest?

  1. Rs.2163

  2. Rs.2100

  3. Rs.2300

  4. Can not be determined

  5. None of these

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let P be the principal. Simple Interest formula: Amount = P(1 + rt). Given: 24850 = P(1 + 0.06×7) = P(1.42). So P = 24850/1.42 = 17500. Compound Interest for 2 years: CI = P[(1+r)² - 1] = 17500[(1.06)² - 1] = 17500[1.1236 - 1] = 17500 × 0.1236 = 2163. Option A (Rs.2163) is correct. The key is first finding the principal from the simple interest information.