Multiple choice

A principal sum of money yields an absolute simple interest amount of Rs. 4,320 at the end of 4 years at a flat rate of 9% per annum. What would be the compound interest generated by the same principal sum at the end of 2 years at a rate of 10% per annum, compounded annually?

  1. Rs 2,400

  2. Rs 2,520

  3. Rs. 2,640

  4. Rs. 2,720

  5. Rs. 2,310
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Simple interest = P*r*t/100 -> 4320 = P*9*4/100 -> 4320 = 0.36P -> P = 12000. Compound interest on 12000 for 2 years at 10%: 12000 * (1.1^2 - 1) = 12000 * 0.21 = 2520.

AI explanation

Using the simple interest formula, the principal is calculated as (4320 times 100) divided by (4 times 9), which equals Rs. 12000. Applying the compound interest formula for 2 years at 10%, the total amount is 12000 times (1 + 10/100) squared, equaling 12000 times 1.21 or Rs. 14520. Subtracting the principal from this amount gives a compound interest of 14520 minus 12000 = Rs. 2520.

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