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A sum amounts to Rs.1440 in 2 years at 10% compounded annually. The principal is
ARs.1190.00
BRs.1190.08
CRs.1200.00
DRs.1300.00
Answer & Solution
Correct answer: B. Rs.1190.08
1. A = P(1 + r)^n, so P = A / (1 + r)^n.
2. P = 1440 / (1.10)^2 = 1440 / 1.21.
3. Compute 1440 / 1.21 = 1190.08 (approximately).
4. So principal is approximately Rs.1190.08.
_Source: ICAI BoS Foundation Paper 3, Ch 4 'Math of Finance', p.8_
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