Question

Find the compound interest on 10,000 at 10% per annum for 2 years 6 months, compounded annually.

• A. ₹2000
• B. ₹2705
• C. ₹2700
• D. ₹2500

Answer 1

Answer:

B. ₹2705

For 2 years 6 months, compounded annually, calculate compound interest for 2 full years first, then simple interest for the remaining 6 months on the amount after 2 years.

Amount after 2 years

$A = P\left(1+\frac{R}{100}\right)^n$
$A = 10000\left(1+\frac{10}{100}\right)^2$
$= 10000(1.1)^2$
$= 10000 \times 1.21$
$= 12100$

Interest for remaining 6 months

$\text{SI} = \frac{12100 \times 10 \times \frac{1}{2}}{100}$
$= 605$

Final amount

$12705 = 12100 + 605$

Compound Interest

$\text{CI} = 12705 - 10000 = 2705$