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Simple & Compound Interest · Question 42 of 60

Question 42

MediumOriginal question

A deposit earns ₹1,025 as compound interest in 2 years at 5% per annum, compounded annually. How much was deposited?

Options for question 42

Show the answer and explanation
CorrectNot quiteAnswer A

Correct answer: A

Explanation

  1. CI = P[(1.05)2−1]=P(1.1025−1)=0.1025PP[(1.05)^2 - 1] = P(1.1025 - 1) = 0.1025P.

  2. P=10250.1025=10000P = \frac{1025}{0.1025} = 10000, so ₹10,000 was deposited.

Worth noting

₹10,250 divides by 0.10 (simple interest for 2 years). ₹11,025 is the amount at the end, not the deposit.

Concept
Finding the principal from compound interest for 2 years
Typical time
50 s
Your time
—
The rule this testsCompound interest
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