# The compound interest on Rs. 4000 at 10% per annum for 2 years 3 months, compounded annually, isA. Rs. 916B. Rs. 900C. Rs. 961D. Rs. 896

Present value, P = Rs.4000

Interest rate, R = 10% per annum

Time, n =2 years 3 months = (2 + 1/4) years

∴ Amount (A) = P (1 + R/100)n × [1 + (R/4)/100] [Where, P = Present value

R = Annual interest rate

n = Time in years]

∴ A = 4000 (1 + 10/100)2 × [1 + (10/4)/100]

⇒ A = 4000 (1 + 1/10)2 × [1 + 1/40]

⇒ A = 4000 (11/10)2 × [41/40]

⇒ A = 4000 × 121/100 × 41/40

⇒ A = 40 × 121 × 41/40

⇒ A = 121 × 41

⇒ A = 4961

∴ Amount = Rs.4961

∴ Compound interest = Rs.(4961 – 4000) [∵CI = A – P]

= Rs.961

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