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Under compound interest, the second year's principal is:
ALast amount
BFirst amount
CAlways 100
DAlways 110
Answer & Solution
Correct answer: A. Last amount
1. Compound interest adds the interest back to the sum.
2. The next year is then worked out on the larger figure.
3. So the second year's principal is the previous year end amount.
4. The answer is the last amount.
_Source: NCERT Class 8 Mathematics, Ch 7 'Comparing Quantities'_
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