Rs.11,500 is borrowed at compound interest at the rate of 5% per annum,
compounding annually. What will be the amount to be paid after 2 years?
Show answer & explanation
Correct answer: A
Explanation
The correct answer is option 1 i.e. Rs.12,678.75
Principal (P) = Rs. 11500
Rate of Interest (R) = 5%
Time (T) = 2 years
Amount (A) = P{1 + (R/100)}T
According to the question -
The amount payable after 2 years -
A = P{1 + (R/100)}T = 11500{1 + (5/100)}2 = 11500(105/100)2 = 11500 × (21/20) × (21/20) = Rs. 12,678.75