Discussion

The compound interest on ₹ 2,000 at 10% per annum for 2 years is

Answer: C

The compound interest is ₹ 420.

Find the amount after 2 years, then subtract the principal:

\[ \begin{aligned} A &= 2000 \left(1 + \frac{10}{100}\right)^{2} \\ &= 2000 \times 1.21 = 2420 \\ CI &= 2420 - 2000 = 420 \end{aligned} \]

Check year by year: the first year earns ₹ 200, and the second year earns 10% of ₹ 2,200, which is ₹ 220, for a total of ₹ 420.

₹ 400 is the simple interest for the same period, and ₹ 200 is only one year's interest.

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