The simple interest on a sum of money at 10% per annum for 2 years is Rs.8,100. Compounded annually, what would be the compound interest (in Rs.) on the same sum for the same period at the same rate of interest?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is Option 2 i.e. 8,505.
We know that,
C.I. = P × (1 + R/100)T - P
where, C.I. = Compound Interest, P = Principal, R = Rate, and T = Time
S.I. for 1 year = 10% and S.I. for 2 years = 20%
So,
⇒ 20% = 8100
By Unitary Method
⇒ 100% = 8100 × 100%/20% = Rs. 40500
Now,
C.I. = P × (1 + R/100)T - P
⇒ C.I. = 40500 × (1 + 10/100)2 - 40500
⇒ C.I. = 40500 × 121/100 - 40500
⇒ C.I. = 405 × 121 - 40500
⇒ C.I. = 49005 - 40500
⇒ C.I. = Rs. 8505