Question : Rs. 7205 is invested in a scheme of compound interest (compounding annually). If the rate of interest is 20% per annum, what is the interest earned (in Rs.) in 1 year?
Option 1: Rs. 1422
Option 2: Rs. 1540
Option 3: Rs. 1441
Option 4: Rs. 1544
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Correct Answer: Rs. 1441
Solution : Given: Principle ($P$) = Rs. 7205 Rate of compound interest ($R$) = 20% per annum Time ($T$) = 1 year So, the total interest = $P(1+\frac{R}{100})^T-P$ = $7205(1+\frac{20}{100})^1-7205$ = $7205(\frac{6}{5})-7205$ = 8646 – 7205 = Rs. 1441 Hence, the correct answer is Rs. 1441.
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