Multiple choice

If the interest on a certain sum for first year at $5\%$ p.a. compounded is Rs. $25$ then, the total interest at the end of second year will be.

  1. $51.25$
  2. $50$
  3. $26.25$

  4. None of the above
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A Correct answer
Explanation

Interest for 1st year = 25. Principal = 25 / 0.05 = 500. Interest for 2nd year = 500 * 0.05 = 25. Total interest after 2 years = 25 + 25 + (25 * 0.05) = 50 + 1.25 = 51.25.

AI explanation

Since the interest for the first year is Rs. 25 at 5% p.a., the principal is (25 / 0.05) = Rs. 500. For the second year, using the compound interest method, interest is calculated on the total amount of Rs. 525. The interest for the second year is 5% of 525, which equals Rs. 26.25. The total interest at the end of the second year is 25 + 26.25 = Rs. 51.25.

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