What will be the compound interest on ₹25,000 at the rate of 6% per annum in 2 years?

Correct option is B

Given:

Principal amount P = ₹25,000

Rate of interest R = 6% per annum

Time T = 2 years

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.

The compound interest CI is given by:

CI = A - P

Solution:

A = $$25,000 \left(1 + \frac{6}{100}\right)^2$$​

A = $$25,000 \left(1 + 0.06\right)^2 = 25,000 \times (1.06)^2$$​

A = $$25,000 \times 1.1236 = 28,090$$​

CI = A - P = 28,090 - 25,000 = 3,090
The compound interest on ₹25,000 at the rate of 6% per annum in 2 years is ₹3,090.

Alternate Method:

$$a + b + \frac{ab}{100}$$

= $$6 + 6 +\frac {36}{100}= 12 + 0.36 = 12.36$$ 

Now,

$$25,000 \times \frac {12.36}{100}$$ =$$\frac{309000}{100} = 3,090$$​​