Kalyan invested an sum of Rs. 12,000 for two years compounded at 5% and 10%, respectively. What is the compound interest (in Rs) at the end of two years?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. 1,860.
Compound Interest = P[(1 + R1/100)(1 + R2/100)] - P
Where P is principal, R1 and R2 are rates of interest.
According to the given question,
Compound Interest = 12000[(1 + 5/100)(1 + 10/100)] - 12000
⇒ 12000 × [(21/20) × (11/10) - 1]
⇒ 12000 × [231/200 - 1]
⇒ 12000 × (31/200) = 1860