Question

Find the compound interest on ₹7,000 at 9% p.a. for 1 year 8 months, compounded annually.

• A. ₹2,087.80
• B. ₹1000.80
• C. ₹1087.80
• D. ₹2000.80

Answer 1

Answer:

C. ₹1087.80

Since the interest is compounded annually and the time is 1 year 8 months, calculate:

• Compound interest for the first full year.

• Simple interest for the remaining 8 months on the amount after 1 year.

Step 1: Amount after 1 year

$A_1=7000\left(1+\frac{9}{100}\right)=7000\times1.09$=₹7630

Step 2: Interest for the remaining 8 months

$\text{SI}=7630\times\frac{9}{100}\times\frac{8}{12}$

$=7630\times0.06$

=₹457.80

Step 3: Total amount

7630+457.80=₹8087.80

Step 4: Compound interest

8087.80-7000=₹1087.80