Question

A sum of Rs. 2000 is invested at 10% per annum compound interest. What is the amount after 2 years?

• A. Rs. 2400
• B. Rs. 2420
• C. Rs. 2440
• D. Rs. 2460

Hint:

Use the compound interest formula or compute year-by-year for accuracy.

Answer 1

The Correct Option is B

- Step 1: Use compound interest formula: $A = P \left(1 + \frac{r}{100}\right)^n$.
- Step 2: $P = 2000$, $r = 10%$, $n = 2$.
- Step 3: $A = 2000 \times \left(1 + \frac{10}{100}\right)^2 = 2000 \times 1.1^2$.
- Step 4: Compute $1.1^2 = 1.21$, so $A = 2000 \times 1.21 = 2420$.
- Step 5: Verify: Year 1 interest = $2000 \times 0.1 = 200$, amount = 2200. Year 2 interest = $2200 \times 0.1 = 220$, amount = $2200 + 220 = 2420$.
- Step 6: Option (2) is Rs. 2420, correct.