Multiple choice

There is 50% increase in an amount in 5 years at simple interest. What will be the compound interest of Rs. 10,000 after 2 years at the same rate?

  1. Rs.2450

  2. Rs.2100

  3. Rs.1855

  4. Rs.2200

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

50% increase in 5 years at simple interest means the rate is 50%/5 = 10% per year. For compound interest on Rs. 10,000 at 10% for 2 years: Year 1 interest = Rs. 1,000, new principal = Rs. 11,000. Year 2 interest = 10% of Rs. 11,000 = Rs. 1,100. Total compound interest = Rs. 1,000 + Rs. 1,100 = Rs. 2,100.

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