Mukesh took some loan from a bank at the rate of 5% per annum compounded annually. If he cleared his loan by paying ₹7,05,600 at the end of 2 years, then what was the amount of loan thaat he had taken ?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. ₹6,40,000.
We know that,
A = P(1 + R/100)T
where, A = Amount, P = Principal, R = Rate and T = Time
⇒ 705600 = P(1 + 5/100)2
⇒ 705600 = P(1 + 1/20)2
⇒ 705600 = P × 21/20 × 21/20
⇒ P = (705600 × 20 × 20)/(21 × 21)
⇒ P = Rs.640000