Multiple choice

The compound interest accrued on an amount at the end of two years @ 12 p.c.p.a. is Rs. 2,862. What is the amount?

  1. Rs. 11,250

  2. Rs. 12,200

  3. Rs. 13,500

  4. Rs. 10,000

  5. None of these
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A Correct answer
Explanation

Compound interest for 2 years at 12% is (1.12^2 - 1) = 0.2544. Principal = 2862 / 0.2544 = 11250.

AI explanation

The compound interest formula is CI equals P times ((1 + R divided by 100)^T minus 1). Substituting the given values gives 2862 equals P times ((1 + 12 divided by 100)^2 minus 1), which simplifies to 2862 equals P times 1.2544 minus 1. This results in 2862 equals P times 0.2544. Solving for P gives 2862 divided by 0.2544, which equals Rs. 11250.

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