Multiple choice

The amount on Rs.2500 in 2 years at annual compound interest, if the rates for the successive years be 4% and 5% per annum respectively is

  1. Rs.3000

  2. Rs.2680

  3. Rs.2730

  4. Rs.2850
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Amount = Principal × (1 + r1/100) × (1 + r2/100) for successive years. Amount = 2500 × 1.04 × 1.05 = 2500 × 1.092 = Rs. 2730. This accounts for 4% and 5% rates in successive years.

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