Multiple choice

Sania deposited Rs. 50,000 in a bank for two years with the interest rate of 5.5% p.a. What will be the final value of investment?

  1. Rs. 50,000

  2. Rs. 50,500

  3. Rs. 55,500

  4. Rs. 55,000
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest = 50,000 * 5.5*2 /100 = Rs. 5500 Interest = 5500 Amount = 50000 + 5500 = Rs. 55,500

AI explanation

At 5.5% per annum simple interest over 2 years, the interest earned is Rs. 50,000 × 5.5% × 2 = Rs. 5,500. Adding that to the principal gives a final maturity value of Rs. 50,000 + 5,500 = Rs. 55,500. This is higher than just adding one year's interest (which would give Rs. 52,750) because interest accrues for both years of the deposit.

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