Albert invests Rs. 8000 at 5% p.a. compounded annually for 2 years. What is the maturity amount?
Aptitude
Compound Interest
Difficulty: Easy
Choose an option
Answer
Correct Answer: Rs. 8820
Explanation
Problem restatementCompute the amount after 2 years at 5% compound interest on Rs. 8000.
Given data
- P = Rs. 8000, r = 5% p.a., t = 2 years
Concept/ApproachUse the compound amount formula A = P(1 + r)t.
Step-by-step calculationA = 8000 × (1.05)2 = 8000 × 1.1025 = Rs. 8820
Verification/AlternativeYear 1: interest = 400 ⇒ amount = 8400; Year 2: interest = 420 ⇒ amount = 8820.