Working back to the principal — Aptitude Question
Working back to the principal: A sum grows to ₹6,050 in 2 years at 10% per annum compound interest. What was the sum? Answer and worked solution on CodeKairo.
- Topic: Simple & Compound Interest
- Section: Quantitative Aptitude
- Difficulty: Easy
- Time target: 40 seconds
Question
A sum grows to ₹6,050 in 2 years at 10% per annum compound interest. What was the sum?
Options
- ₹4,800
- ₹5,000
- ₹5,200
- ₹5,500
Show the answer and the worked solution
Correct answer: B. ₹5,000
Worked solution
- 6050 = P × 1.21.
- P = 6050/1.21 = ₹5,000.
Answer: ₹5,000.
The idea
Present value = amount ÷ (1 + r)ⁿ. Recognise 1.21 = 1.1², 1.331 = 1.1³, 1.44 = 1.2² and the division is instant.
Shortcut. Back-substitute: ₹5,000 → 5,500 → 6,050 in two 10% steps.
Common trap. ₹5,500 — dividing by 1.1 only once (one year's growth); two years need 6,050 ÷ 1.21.
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