Multiple choice

Find the principal if the interest compounded at the rate of 12% per annum, compounding annually for 2 years is Rs. 1,908.

  1. Rs. 6,500

  2. Rs. 5,400

  3. Rs. 7,500

  4. Rs. 4,500
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Compound interest formula: CI = P * ((1 + r/100)^n - 1). 1908 = P * ((1 + 0.12)^2 - 1) = P * (1.2544 - 1) = P * 0.2544. P = 1908 / 0.2544 = 7500.

AI explanation

Let the principal be P. The formula for the amount with compound interest for two years is Amount = P * (1 + Rate/100)^2. The amount is the sum of the principal and the interest, which is P + 1908 = P * (1 + 12/100)^2. This simplifies to P + 1908 = P * 1.2544, so 1908 = 0.2544 * P. Dividing 1908 by 0.2544 gives the principal sum of 7500. The result is Rs. 7,500.

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