Question

Find the compound interest for Rs. $1,000$ for $4$ years at $5\%$ p.a. When the interest is compounded annually.

• A. $220$
• B. $218$
• C. $215$
• D. $250$

Answer 1

Answer: (C)

Interest for first year $=\frac{1000\times 5\times 1}{100}=₹50$

Amount after first year $=1000+50=₹1050$

Interest for second year $=\frac{1050\times 5\times 1}{100}=₹52.5$

Amount after second year $=1050+52.5=₹1102.5$

Interest for third year $=\frac{1102.5\times 5\times 1}{100}=₹55.125$

Amount after third year $=1102.5+55.125=₹1157.625$

Interest for fourth year $=\frac{1157.625\times 5\times 1}{100}=₹57.88125$

Amount after fourth year $=1157.625+57.88125=₹1215.50625$

Compound interest $=1215.50625-1000=215.50625=₹215$