Question

What will be the compound interest (in ₹) on ₹10,000 for 2 years at 5% per annum, compounded annually? 

Options

• 11,025 

• 1,025

• 11,000

• 1,000

Answer 1

1,025

Explanation:

Principal = ₹10,000, Rate% = 5% and Time = 2years

1st year	2nd year
Principal 10,000	Principal 10,500
5% rate = 500	5% rate = 500
Amount = 10,500	Amount = 11025

:. Interest = (11, 025 − 10, 000)

= ₹1025