A man gets a simple interest of Rs.500 on a certain principal at the rate of 5% p.a in two years. Find the compound interest the man will get on twice the principal in two years at the same rate.
Options:
A . Rs.500
B . Rs.250
C . Rs.5012.50
D . Rs.5062.50
E . None of these.
Answer: Option E
Let the principal be Rs.P S.I at 5% p.a in 8 years on Rs.P = Rs.500(P)(8)(5)/100 = 500P = 1250C.I on Rs.2P i.e., Rs.2500 at 5% p.a in two years=2500{ [1 + 5/100]2 - 1} = 2500{ 212 - 202 /202} = 2500/400(441 - 400)= 25/4(41) = 1025/4 = Rs.256.25
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