1.

If in 2 years at simple interest the principal increases by 16%, what will be the compound interest earned (in Rs.) on Rs. 25,000 in 2 years at the same rate?1). 40002). 21603). 20004). 4160

Answer»

Let the rate of interest be r%.

SIMPLE interest earned on RS. 25000 in 2 years = 25000 × 0.16 = Rs. 4000

⇒ 4000 = (25000 × r × 2)/100

⇒ r = 8%

COMPOUND interest in 2 years = 25000 × [1 + 8/100]2 - 25000

⇒ 29160 - 25000 = Rs. 4160


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