If the compound interest on a certain sum for 2 years at 10% per annum is $121,

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Question: If the compound interest on a certain sum for 2 years at 10% per annum is $121, what is the principal amount?

Options:

$1000
$1100
$1200
$1300

Correct Answer: $1000

Solution:

Let Principal = P. Then, CI = P(1 + r/100)^n - P = P(1 + 0.1)^2 - P = P(1.21 - 1) = 0.21P. Given CI = 121, we have 0.21P = 121, thus P = 121 / 0.21 = $1000.

If the compound interest on a certain sum for 2 years at 10% per annum is $121,

Practice Questions

If the compound interest on a certain sum for 2 years at 10% per annum is $121, what is the principal amount?

$1000
$1100
$1200
$1300

Questions & Step-by-Step Solutions

If the compound interest on a certain sum for 2 years at 10% per annum is $121, what is the principal amount?

Step 1: Understand that we need to find the principal amount (P) given the compound interest (CI) for 2 years at a rate of 10%.
Step 2: Recall the formula for compound interest: CI = P(1 + r/100)^n - P, where r is the rate and n is the number of years.
Step 3: Substitute the values into the formula: CI = P(1 + 0.1)^2 - P.
Step 4: Calculate (1 + 0.1)^2, which is (1.1)^2 = 1.21.
Step 5: Now, rewrite the CI formula: CI = P(1.21) - P.
Step 6: Factor out P: CI = P(1.21 - 1) = P(0.21).
Step 7: We know that CI is $121, so set up the equation: 0.21P = 121.
Step 8: Solve for P by dividing both sides by 0.21: P = 121 / 0.21.
Step 9: Calculate the value: P = 121 / 0.21 = $1000.

Compound Interest Calculation – Understanding how to calculate compound interest using the formula CI = P(1 + r/100)^n - P.

If the compound interest on a certain sum for 2 years at 10% per annum is $121,

What’s inside this PDF?

If the compound interest on a certain sum for 2 years at 10% per annum is $121,

Practice Questions

Questions & Step-by-Step Solutions

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