Simple interest on a principal at 4% per annum for 2 years equals 80. Find the compound interest for the identical term and rate_________?
Show answer Hide answer
Answer: A. Rs. 81.60
Explanation
The compound interest amount accurately reflects compounding annually over the specified two year term. Calculating interest on interest yields a slightly higher final accumulated total than simple interest. The mathematical formula for compound interest produces the exact value of rupees eighty one point sixty. Compound interest calculates periodic growth by adding accumulated interest directly back into the principal balance. The principal amount is determined from the simple interest formula using the given rate and time. The final compound interest value is found by subtracting the original principal from the total amount.
Banks and financial institutions use compound interest calculations for standard savings accounts and investment products. Understanding compound interest helps individuals evaluate long term loan costs and high yield savings returns. Financial planning relies heavily on exponential growth formulas to project future wealth accumulation accurately. Option b represents the simple interest total instead of the required compound interest amount. Option c includes the entire accumulated balance rather than just the generated interest portion alone. Option d is incorrect because the correct calculated value is explicitly listed among choices.
- Subject
- Mathematics
- Category
- Mathematics
- Topic
- —
- Difficulty
- medium
Related questions
Q1. A invests in a 10% stock at 96. To obtain an equivalent yield, what amount should B invest in a 12% stock___________?
Show answer Hide answer
Answer: C. Rs.115.20
Equivalent yield requires that the return per rupee invested remains constant. A 10 percent stock at 96 generates a specific income ratio per unit of currency. Equating this ratio to a 12 percent stock yields a required...
Q2. What investment is required in a 10% stock at Rs. 96 to secure an annual return of Rs. 650___________?
Show answer Hide answer
Answer: A. Rs. 6240
Securing an annual return of six hundred fifty from a ten percent stock requires calculating the total nominal value. The stock is quoted at ninety six currency units, meaning ninety six is paid for every one hundred nom...
Q3. Solve for x in the equation: 6x – 27 + 3x = 4 + 9 – x
Show answer Hide answer
Answer: A. 4
The correct answer is four for the value of x in the linear equation. Combining like terms on both sides of the equation simplifies the expression. Dividing forty by ten isolates the variable x to yield a value of four....
Q4. Investing Rs. 1552 in a stock at 97 yields an income of Rs. 128. What is the dividend rate of the stock__________?
Show answer Hide answer
Answer: B. 8%
Investing fifteen fifty two in a stock priced at ninety seven gives a nominal stock face value of sixteen hundred. An annual income of one hundred twenty eight earned on a sixteen hundred nominal value represents the ret...
Q5. Calculate the annual return from investing Rs. 6800 in a 10% stock priced at 136.
Show answer Hide answer
Answer: D. 500
Dividing the total investment of six thousand eight hundred by the market price of one hundred thirty-six gives fifty stock units. Each unit of stock provides a nominal ten percent return based on its standard face value...
Q6. Calculate the annual return generated by Rs. 2500 invested in an 8% stock at 106.
Show answer Hide answer
Answer: C. 200
The annual return is determined by scaling the nominal interest rate against the purchase price. Investing an amount in an 8 percent stock at 106 means paying 106 for every 100 of face value. Dividing the nominal dividen...