alleryCompound interest on Rs.1000 at 10% per annum compounded annually for 2 years is
ARs.200
BRs.220
CRs.250
DRs.210
Answer & Solution
Correct answer: D. Rs.210
1. Amount under CI: A = P(1 + R/100)^T.
2. A = 1000 * (1.10)^2 = 1000 * 1.21 = 1210.
3. CI = A - P = 1210 - 1000 = 210.
4. So the compound interest is Rs.210; option B is the SIMPLE interest, which is the trap.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.8_
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