Question

In 2 years at simple interest the principal increases by 8%. What will be the compound interest earned (in Rs) on Rs 10 lakhs in 2 years at the same rate?

A) 86000 B) 81600 C) 90000 D) 94000

Answer 1

In 2 years at the simple interest the principal increases by 8 %.

To find : What will be the compound interest earned on Rs. 10 lakhs in 2 years at the same rate.

solution : S.I = 8% of P

i.e., P × r × t/100 = 8P/100

⇒P × r × 2/100 = 8P/100

⇒2r = 8

⇒r = 4% per annum.

now C.I = P(1 + r/100)ⁿ - P

here, P = 1000000 Rs. r = 4 % and n = 2

so, C.I = 1000000(1 + 4/100)² - 1000000

= 1000000[(1 + 0.04)² - 1]

= 1000000[(1.04)² - 1]

= 1000000[1.0816 - 1]

= 1000000 × 0.0816

= 81600

Therefore the compound interest will be 81600 Rs. i.e., option (B) is correct choice.