What is the present value of the sum if the interest compounded at the rate of 18% per annum for two years is Rs. 981?
Show answer & explanation
Correct answer: B
Explanation
The correct answer is option 2 i.e. Rs.2,500.
Principal = P
rate of interest r = 18% per annum
Time t = 2 years
Compound interest CI = 981
CI = P{(1 + r/100)t - 1}
981 = P{(1 + 18/100)2- 1}
981 = P(59/50)2 - 1
981 = P(981/2500)
P = Rs 2500