A principal gives an amount of Rs.26,450 in 2 years at the rate of 15% per annum on compound interest, interest is compounding annually. What is the principal?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. Rs.20,000.
A = P(1 + R/100)T
where, A = Amount, P = Principal, R = Rate and T = Time
⇒ 26450 = P(1 + 15/100)2
⇒ 26450 = P(1 + 0.15)2
⇒ 26450 = P(1.15)2
⇒ P = 20000
Hence, The principal is Rs.20000