A sum of ₹1,00,000 was taken from a bank at the rate of 7% p.a to be compounded annually for 5 years. Calculate the compound interest. (Closest to a ₹)
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. ₹40,255
Formula used:
CI = P(1 + R/100)T - P ----- (1)
Where CI = Compound interest, P = principal, R = rate and T = Time
Calculations:
Using the above formula we get;
⇒ CI = 100000(1 + 7/100)5 - 100000
⇒ 140255.17 - 100000
⇒ 40255.17 or 40255 (approx.)