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Compound interest on ₹10000 at 10% per annum for 2 years:
A₹2000
B₹2050
C₹2100 (= 10000 × (1.1² - 1) = 10000 × 0.21)
D₹2200
Answer & Solution
Correct answer: C. ₹2100 (= 10000 × (1.1² - 1) = 10000 × 0.21)
CI = P(1 + r)^n - P = 10000 × 1.1² - 10000 = 12100 - 10000 = 2100. CI > Simple Interest (which would be 2000). Difference = ₹100 = first year interest on second year interest.
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