Question
A person deposits ₹12,000 in a bank offering a 5%
interest rate compounded annually. After 2 years, how much interest will he have earned?Solution
Compound Interest formula: CI = P(1 + r/100)^t − P Here, P = ₹12,000, r = 5%, t = 2 years CI = 12,000(1 + 0.05)^2 − 12,000 CI = 12,000(1.1025) − 12,000 CI = 13,230 − 12,000 = ₹1,230 Correct answer: a) ₹1,230
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