A sum of ₹20,000 is borrowed by Heena for 2 years at an interest rate of 8% compounded annually. Find the compound interest.

Correct option is B

Given:
Principal (P) = ₹20,000
Rate of interest (R) = 8% per annum
Time (T) = 2 years
Formula Used:
Compound Interest (CI) = $$P \times \left[\left(1 + \frac{R}{100}\right)^T - 1\right]$$​​
Solution:
​$$CI = 20000 \times \left[\left(1 + \frac{8}{100}\right)^2 - 1\right] \\= 20000 \times \left[(1.08)^2 - 1\right] \\= 20000 \times \left[1.1664 - 1\right] \\= 20000 \times 0.1664 \\= \text{₹}3,328$$ 

Alternate Solution:
In the ratio method, we use the amount ratio for compound interest over 2 years:
Amount Ratio = $$(100 + R)^2 : 100^2$$​​
Amount Ratio = $$(100 + 8)^2 : 100^2 = 108^2 : 100^2 = 11664 : 10000$$​​
So. 10000 unit = Rs. 20000 
1 unit = Rs. 2
Hence, Compound Interest = 11664- 10000 = 1664 unit = R. 3328