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Question : The compound interest on Rs. 1,00,000 at 25% per annum for 2 years compounded annually is:

Option 1: Rs. 57,650

Option 2: Rs. 50,250

Option 3: Rs. 56,250

Option 4: Rs. 52,255


Team Careers360 21st Jan, 2024
Answer (1)
Team Careers360 22nd Jan, 2024

Correct Answer: Rs. 56,250


Solution : Given that P = Rs.1,00,000, $r$ = 25% and $t$ = 2 years
Compound Interest = 100,000(1 + $\frac{25}{100})^{2}$ – P
⇒ Compound Interest = 100000$({1 + \frac{1}{4}}) ^{2}$ – 100000
= 100000$({\frac{5}{4}}) ^{2}$ – 100000
= 100000$[\frac{25}{16}-1]$
= 100000$[\frac{9}{16}]$
= Rs. 56250
Hence, the correct answer is Rs. 56,250.

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