Which sum will provide a compound interest of ₹1020 in 2 years at 4% per annum interest compounded annually?

Correct option is B

Given:

Compound Interest ,CI = ₹1020

Rate of interest, R = 4% per annum

Time, T = 2 years

Compounded annually

Formula Used:

CI = $$P\left[\left(1+\frac{R}{100}\right)^T - 1\right]$$​​

Solution:

1020 = $$P\left[(1.04)^2 - 1\right]$$​​

1020 = $$P\left[1.0816 - 1\right]$$​​

1020 = P(0.0816)

P = $$\frac{1020}{0.0816}$$​ = ₹12500

Alternate Solution (Exam Trick):