Multiple choice

A certain amount of money invested at 10% per annum compound interest for two years became Rs. 2000. What is the initial investment?

  1. Rs. 856

  2. Rs. 1625

  3. Rs. 1653

  4. Rs. 1275
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A = P(1 + r/100)^n. 2000 = P(1.1)^2 = P(1.21). P = 2000 / 1.21 = 1652.89, which rounds to 1653.

AI explanation

Using the compound interest formula for two years, the amount is Principal * (1 + R/100)^2. We are given 2000 = Principal * (1 + 10/100)^2, which simplifies to 2000 = Principal * (11/10)^2. This further reduces to 2000 = Principal * 1.21. The initial investment is 2000 / 1.21, which is approximately 1653.

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