If the interest earned during the 2nd year on a certain sum is ₹2,352, and the rate of interest is 5% per annum compounded annually, then the sum is:

Correct option is C

Given:

Interest earned in the 2nd year = ₹2352

Rate of interest = 5% per annum, compounded annually

Concept Used:

Interest of the 2nd year in compound interest = Amount after 2 years − Amount after 1 year

This equals:

CI_2nd = P(1+r)r

Solution:

Amount after 1 year = P(1.05)

Amount after 2 years = P(1.05)²

Interest in 2nd year:

P(1.05)² - P(1.05) = P(1.05)(0.05) = 2352

P =  $$\frac{2352}{1.05 × 0.05}$$​​

P = $$\frac{2352}{0.0525}$$​ = ₹44800