What will be the compound interest on Rs 7500 at 4% per annum for 2 years compound annually?

Find the compound interest on Rs.7500 at 4% per annum for 2 years, compounded annually\[  (a){\text{ Rs}}{\text{. 612}} \\  (b){\text{ Rs}}{\text{. 412}} \\  (c){\text{ Rs}}{\text{. 782}} \\  (d){\text{ Rs}}{\text{. 112}} \\ \]

Answer

Hint – In this problem use the direct formula for compound interest that is $A = P{\left( {1 + \dfrac{r}{{100}}} \right)^t}$where r is the rate that is 4%. Take the principal amount as Rs. 7500. This will help getting the value of A directly, then the compound interest will simply be the subtraction of A and the principal value. Complete step-by-step answer:
As we know the formula for compound interest which is given as
$ \Rightarrow A = P{\left( {1 + \dfrac{r}{{100}}} \right)^t}$…………………………. (1)
Where A = total amount received after the compound interest.
             P = Principle amount.
             r = rate of interest.
             t = time in years.
Therefore compound interest (C.I) = A - P
Now it is given that P = Rs. 7500, r = 4%, t= 2 years
Therefore, C.I = $P{\left( {1 + \dfrac{r}{{100}}} \right)^t} - P$
Now substitute the value we have,
Therefore, C.I = $7500{\left( {1 + \dfrac{4}{{100}}} \right)^2} - 7500$
$ \Rightarrow C.I = 7500{\left( {1 + \dfrac{1}{{25}}} \right)^2} - 7500$
$ \Rightarrow C.I = 7500{\left( {\dfrac{{26}}{{25}}} \right)^2} - 7500$
$ \Rightarrow C.I = 7500\left( {\dfrac{{26}}{{25}}} \right)\left( {\dfrac{{26}}{{25}}} \right) - 7500$
$ \Rightarrow C.I = 12\left( {26} \right)\left( {26} \right) - 7500$
$ \Rightarrow C.I = 8112 - 7500 = 612$
So the compound interest is Rs. 612
Hence option (A) is correct.

Note – There is always a confusion regarding the basics of simple interest and compound interest. Simple interest is calculated on the principal or original amount of a loan whereas compound interest is calculated on the principal amount and also on the accumulated interest of previous periods and thus it can also be termed as interest of interests.

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Answers

Related Find the compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually.a)Rs. 610b)Rs. 612c)Rs. 614d)Rs. 616Correct answer is option 'B'. Can you explain this answer?

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Amount = 7500x104%x104%
=8112
interest = amount -principal
= 8112-7500
=612

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Question Description
Find the compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually.a)Rs. 610b)Rs. 612c)Rs. 614d)Rs. 616Correct answer is option 'B'. Can you explain this answer? for CA Foundation 2022 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Find the compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually.a)Rs. 610b)Rs. 612c)Rs. 614d)Rs. 616Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2022 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Find the compound interest on Rs. 7500 at 4% per annum for 2 years, compounded annually.a)Rs. 610b)Rs. 612c)Rs. 614d)Rs. 616Correct answer is option 'B'. Can you explain this answer?.

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So compound interest = (8112 - 7500) = 612

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