Multiple choice

What will be the compound interest on the sum of ₹ 25,000 for 2 years at 12% p.a, if the interest is compounded annually?

  1. ₹6390

  2. ₹6420

  3. ₹6360

  4. ₹6460

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

Compound Interest = Principal × (1 + r/100)^n - Principal. Here: 25000 × (1 + 12/100)^2 - 25000 = 25000 × (1.12)^2 - 25000 = 25000 × 1.2544 - 25000 = 31360 - 25000 = 6360. The compound interest earned is Rs 6360.