A sum invested at 10% per annum, compounded annually, amounts to ₹14,520 after 2 years. What was the sum?

₹11,616Correct answerYour answer₹12,000Correct answerYour answer₹12,100Correct answerYour answer₹13,200Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer B

Correct answer: B

Amount = $P \times (1.1)^2 = 1.21P$ .
$P = \frac{14520}{1.21} = 12000$ , so the sum was ₹12,000.

Worth noting

₹12,100 divides by 1.2 (simple interest for 2 years). ₹13,200 goes back only one year. ₹11,616 subtracts 20% of ₹14,520, but percentages must be undone by dividing.

Concept: Finding the principal from a compound amount
Typical timeTypical: 50 s
Your timeYours: —

The rule this testsCompound interest

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A sum invested at 10% per annum, compounded annually, amounts to ₹14,520 after 2 years. What was the sum?

Explanation