A sum earns compound interest at 10% in the first year and 20% in the second year. The total compound interest for the 2 years is ₹4,800. What is the sum?

₹15,000Correct answerYour answer₹16,000Correct answerYour answer₹24,000Correct answerYour answer₹48,000Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Amount = $P \times 1.1 \times 1.2 = 1.32P$ , so CI = $0.32P$ .
$0.32P = 4800$ , so $P = \frac{4800}{0.32} = 15000$ .
The sum is ₹15,000.

Worth noting

₹16,000 adds the rates to 30% as if they were simple interest. The second year's 20% is also earned on the first year's interest, which makes 32% in all.

Concept: Principal from compound interest with changing rates
Typical timeTypical: 90 s
Your timeYours: —

The rule this testsCompound interest

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Ten questions from Simple & Compound Interest, at your own pace.

A sum earns compound interest at 10% in the first year and 20% in the second year. The total compound interest for the 2 years is ₹4,800. What is the sum?

Explanation