By Mansi Yadav

Verified by Ajay Kumar

Calculate the compound interest on ₹2,500 at 20% per annum for 1 year 9 months, compounded annually.

  1. ₹1050

  2. ₹950

  3. ₹1000

  4. ₹900

Answer: B

Solution

Solution: After 1 year, the amount is \(2500\times1.20=3000\). For the remaining 9 months, calculate simple interest on ₹3,000: \(SI=\frac{3000\times20\times9}{100\times12}=450\). Total amount \(=3000+450=3450\). Compound interest \(=3450-2500\) = ₹950. Trick: With annual compounding and a fractional final year, compound for the completed year and calculate simple interest for the remaining months.

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