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Under compound interest, the interest each year is calculated on the:
AOriginal principal only
BInterest of first year
CMarked price of goods
DAmount of the previous year
Answer & Solution
Correct answer: D. Amount of the previous year
1. Each year the interest is added to the sum.
2. Next year's interest works on that new amount.
3. So it is on the previous year's amount.
_Source: NCERT Class 8 Mathematics, Chapter 7, Comparing Quantities._
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