CA Foundation · Quantitative Aptitude · Mathematics of Finance
Mrs. Kapoor invests ₹20,000 at compound interest. The rate is 10% for the first year and 20% for the second year. What is the amount at the end of 2 years?
The amount is ₹26,400. With different rates each year, multiply the growth factors in turn: 20,000 × 1.10 × 1.20. The first year gives ₹22,000, and the second year takes it to ₹26,400.
- A₹26,000
- B₹26,450
- C₹26,400Correct
- D₹25,600
Explanation
After year 1: 20,000 × 1.10 = 22,000. After year 2: 22,000 × 1.20 = ₹26,400. Adding 30% simple gives ₹26,000, and using an average 15% compounded gives ₹26,450; both are wrong.
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