How much compound interest does Tarun have to pay on a loan of Rs. 8,50,000 at the rate of 5% p.a. over a period of two years in case of annual compounding?
- ARs. 9,57,125
- BRs. 1,07,125
- CRs. 9,37,125
- DRs. 87,125
Solution & Step-by-step Explanation
The formula for total amount A with annual compounding is:
A=P(1+
100
R
)
n
Given:
Principal (P) = Rs. 8,50,000
Rate (R) = 5%
Time (n) = 2 years
A=850000×(1+
100
5
)
2
A=850000×(
20
21
)
2
A=850000×
400
441
A=2125×441=Rs. 9,57,125
The Compound Interest (CI) is:
CI=A−P=957125−850000=Rs. 1,07,125
A=P(1+
100
R
)
n
Given:
Principal (P) = Rs. 8,50,000
Rate (R) = 5%
Time (n) = 2 years
A=850000×(1+
100
5
)
2
A=850000×(
20
21
)
2
A=850000×
400
441
A=2125×441=Rs. 9,57,125
The Compound Interest (CI) is:
CI=A−P=957125−850000=Rs. 1,07,125