Question

The compound interest on Rs. 25,600 for 2 years at 6.25% per annum is:

• A. Rs. 2,800
• B. Rs. 3,000
• C. Rs. 3,300
• D. Rs. 3,800

Hint:

Compound Interest grows exponentially over time. Ensure you apply the correct formula and round off the values appropriately in calculations.

Answer 1

The Correct Option is C

Step 1: Identify the given values
Principal \( P = 25,600 \), Rate \( R = 6.25% \) per annum, Time \( T = 2 \) years.
Step 2: Apply the Compound Interest formula
The formula for compound interest is:
\[ A = P \left(1 + \frac{R}{100} \right)^T \] Substituting the values:
\[ A = 25600 \times \left(1 + \frac{6.25}{100} \right)^2 \] \[ = 25600 \times \left(1.0625\right)^2 \] \[ = 25600 \times 1.1289 \] \[ = 28,900.64 \] Step 3: Calculate the compound interest
Compound Interest \( C \) is given by:
\[ C = A - P = 28,900.64 - 25,600 = 3,300.64 \] Thus, the correct answer is Rs. 3,300.