Compound interest for two years — Aptitude Question
Compound interest for two years: What is the compound interest on ₹10,000 at 10% per annum for 2 years, compounded… Answer and worked solution on CodeKairo.
- Topic: Simple & Compound Interest
- Section: Quantitative Aptitude
- Difficulty: Easy
- Time target: 40 seconds
Question
What is the compound interest on ₹10,000 at 10% per annum for 2 years, compounded annually?
Options
- ₹2,000
- ₹2,100
- ₹2,200
- ₹2,500
Show the answer and the worked solution
Correct answer: B. ₹2,100
Worked solution
- Amount = 10,000 × 1.1² = 10,000 × 1.21 = 12,100.
- CI = 12,100 − 10,000 = ₹2,100.
Answer: ₹2,100.
The idea
For two years, CI% = 2r + r²/100 (here 20 + 1 = 21%). The extra r²/100 is the interest on the first year's interest.
Shortcut. Year 1 earns ₹1,000; year 2 earns 10% of 11,000 = ₹1,100; together ₹2,100.
Common trap. ₹2,000 — simple interest (10% × 2 years); compounding adds the second year's interest on the first year's ₹1,000.
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