What will be the compound interest (in ₹) on a sum of ₹30,000 after two years at a rate of 16% per annum compounded annually?

Correct option is C

Given:

Principal (P) = ₹30,000

Rate of interest (r) = 16% per annum

Time (t) = 2 years

The interest is compounded annually.

Formula Used:
The formula for compound interest is:

A = P$$\left(1 + \frac{r}{100}\right)^t$$​

Where:

A is the amount after interest,

P is the principal,

r is the rate of interest,

t is the time in years.

Solution:

Calculate the amount after 2 years:

A = 30,00$$0 \left(1 + \frac{16}{100}\right)^2 = 30,000 \left(1 + 0.16\right)^2 = 30,000 \times (1.16)^2$$​​

A = 30,00$$0 \times 1.3456 = ₹40,368$$​

Compound Interest = A - P = 40,368 - 30,000 = ₹10,368