Find the compound interest if P = Rs 2000, R= 5 % per annum and N = 2 years

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205

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155

251

answer is A.

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Detailed Solution

Given principal amount is P =Rs 2000
Time to repay the amount is N = 2 years
Rate of interest is R =5 % per annum
To find the amount of compound interest after 2 years
C.I. = ?
To calculate the compound interest first we will calculate the final amount that we need to pay after 2 year
We know that the formula to calculate the final amount

A = P {(1 + \frac{R}{100})}^{n}

On putting the given values.

A = 2000 {(1 + \frac{5}{100})}^{2}

A = 20000 \times \frac{441}{400}

A= 2205
∴ C.I.=A−P
On putting the values of A and P
= Rs.2205−Rs.2000
= Rs.205
Hence the compound interest that needs to be paid after two years will be equal to Rs 205.

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