Question

If the compound interest for 2 years at 10% per annum is Rs.1050, then the principal amount is

• A. Rs.5000
• B. Rs.5500
• C. Rs.6000
• D. Rs.6500

Hint:

For 2-year compound interest, use $(1 + R/100)^2 - 1$ shortcut.

Answer 1

The Correct Option is A

Concept: Compound interest for 2 years: \[ CI = P \left[\left(1 + \frac{R}{100}\right)^2 - 1\right] \] Explanation: Rate $R = 10\%$ \[ CI = P[(1.1)^2 - 1] = P(1.21 - 1) = 0.21P \] Given: \[ 0.21P = 1050 \Rightarrow P = \frac{1050}{0.21} = 5000 \]