Multiple choice

An amount increases by 40% in 4 years at SI. Find CI of $10,000 after 2 years at the same rate of interest.

  1. $2100
  2. $2150
  3. $1100
  4. $21000

  5. None of these
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A Correct answer
Explanation

SI = P*R*T/100. 40 = 100*R*4/100 implies R = 10%. CI for 10,000 at 10% for 2 years is 10000 * (1.1^2 - 1) = 10000 * 0.21 = 2100.

AI explanation

First, find the annual rate of interest using the simple interest percentage formula, where a 40% increase in 4 years means the rate is 10% per annum. Next, apply the compound interest formula for two years, which is CI = P[(1 + R/100)^2 - 1]. Substituting the principal of $10,000 and rate of 10%, we get 10000[(1.1)^2 - 1] = 10000(1.21 - 1). This calculates to 10000 x 0.21, giving a compound interest of $2100.

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