Question

A sum of Rs. 10,000 is invested at 5% per annum compound interest for 2 years. What is the total amount?

• A. Rs. 11,000
• B. Rs. 11,025
• C. Rs. 11,050
• D. Rs. 11,100

Hint:

Use the compound interest formula and calculate powers accurately.

Answer 1

The Correct Option is B

We need the amount after 2 years.
- Step 1: Formula: \( A = P \left(1 + \frac{r}{100}\right)^n \).
- Step 2: Substitute: \( P = 10000 \), \( r = 5 \), \( n = 2 \).
\[ A = 10000 \left(1 + \frac{5}{100}\right)^2 = 10000 \times (1.05)^2 \] - Step 3: Calculate: \( (1.05)^2 = 1.05 \times 1.05 = 1.1025 \).
\[ A = 10000 \times 1.1025 = 11025 \] - Step 4: Options:
- (b) 11,025: Correct.
Thus, the answer is b.