Question
Download Solution PDFA person invested ₹18,000 at the rate of 20% compound interest per annum. Then the interest he gets after completing the duration of two years is
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFGiven:
Principal (P) = ₹18,000
Rate (r) = 20% per annum
Time (t) = 2 years
Formula used:
Compound Interest (CI) = P × [(1 + r/100)t - 1]
Calculations:
CI = 18,000 × [(1 + 20/100)2 - 1]
⇒ CI = 18,000 × [(1 + 0.2)2 - 1]
⇒ CI = 18,000 × [(1.2)2 - 1]
⇒ CI = 18,000 × 0.44
⇒ CI = ₹7,920
∴ The correct answer is option (1).
Shortcut Trick
Equivalent rate of interest for 2 years (using the formula for successive percentages: A + B + (A × B) / 100)
= 20 + 20 + (20 × 20) / 100
= 40 + 400 / 100 = 44%
Therefore, the required compound interest = (Principal × Equivalent Rate) / 100
= (18000 × 44) / 100
= ₹7920
Last updated on Sep 27, 2023
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