Raghu invests ₹5,00,000 in the name of his daughter, who is 16 years old, in a scheme that pays 5% compound interest per annum, compounded annually. What will be the total amount due to the daughter when she turns 18 years old?

Correct option is C

Given:

P = ₹5,00,000

r = 5%

n = 2 years (from age 16 to age 18)

Formula used:

A = P $$(1+ \frac{r}{100})^n$$

Where:

A is the total amount after n years

P is the principal amount (initial investment)

r is the annual interest rate

n is the number of years the money is invested

Solution:

A = 5,00,000 $$(1+ \frac{5}{100})^2$$

A = 5,00,000 $$(1+0.05)^2$$

A = 5,00,000 $$(1.05)^2$$

A = 5,00,000 × 1.1025

A = ₹5,51,250

Therefore, the total amount due to Raghu's daughter when she turns 18 years old will be ₹5,51,250.

Thus, correct answer is (c) ₹5,51,250