The compound interest on ₹ 10,000 at 10% per annum for 2 years, compounded annually, is
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Answer: Option B — ₹ 2,100
Detailed Solution
Amount .
CI = 12,100 − 10,000 = ₹ 2,100.
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Year 1 interest 1,000; year 2 interest on 11,000 is 1,100; total 2,100.⚠ Common trap
(D) ₹ 12,100 — gives the amount, not the interest.Quick tip
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Simple & Compound Interest — Preparation
This question tests your understanding of Simple & Compound Interest, a key topic in the Quantitative Aptitude section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.
Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus interest already earned. Questions test the formulas SI = PRT/100 and A = P(1 + R/100)^n, the difference between CI and SI over two or three years, interest compounded half-yearly or quarterly, instalments, and the time needed for money to double or triple. Useful shortcuts include the two-year CI minus SI difference, which equals P(R/100)^2, and the effective-rate method, which treats two years of compounding at R% as a single percentage change. Connecting interest to successive percentage change makes most compound interest questions much faster than expanding the formula. Practise the simple and compound interest questions below. Each comes with a full solution and a shortcut where one applies.