Question

Rs.1000 was deposited in a bank for 2 years at 5% compound interest. At the end of the second year, the maturity amount will be

• A. Rs. 1110.50
• B. Rs. 1120
• C. Rs. 1220.50
• D. Rs. 1102.50

Answer 1

The Correct Option is D

Compound Interest formula is: \[ A = P \left( 1 + \frac{R}{100} \right)^T \] where \( P = 1000 \), \( R = 5% \), and \( T = 2 \, years \). Substitute the values in the formula: \[ A = 1000 \left( 1 + \frac{5}{100} \right)^2 = 1000 \left( 1.05 \right)^2 = 1000 \times 1.1025 = 1102.50 \] For compound interest, use the formula \( A = P \left( 1 + \frac{R}{100} \right)^T \).