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Multiple choice

Compound interest on Rs. 1200 for 2 years at 5% is-

  1. Rs. 125

  2. Rs. 130

  3. Rs. 120

  4. Rs. 123

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

Compound interest formula: A = P(1 + r/100)^n. Here P = 1200, r = 5, n = 2. A = 1200(1.05)² = 1200 × 1.1025 = 1323. Compound interest = A - P = 1323 - 1200 = Rs. 123. Option A (Rs. 125) would be simple interest for 2 years at 5%.

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