Question : A sum of Rs. 2420 is accumulated in 2 years at 10% Compound Interest on a certain amount. Then the original amount is:
Option 1: Rs. 1000
Option 2: Rs. 2000
Option 3: Rs. 1500
Option 4: Rs. 2500
Correct Answer: Rs. 2000
Solution : Total amount = Rs. 2420 Rate, $R$ = 10% Time, $n$ = 2 Let $P$ be the sum. Total amount = $P(1+\frac{R}{100})^{n}$ where $P$ is principal, $R$ is the rate of interest per annum compounded annually and $n$ is time in years. ⇒ 2420 = $P(1+\frac{10}{100})^{2}$ ⇒ $P×(1.1)^{2}$ = 2420 ⇒ $P$ = $\frac{2420}{1.21}$ = 2000 Hence, the correct answer is Rs. 2000.
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