Exams › SSC CGL (Prelims) › Maths

The principal that yields a compound interest of ₹420 during the second year at 5% per annum is:

1. ₹7000
2. ₹5000
3. ₹8000
4. ₹6000

Correct answer: ₹8000

Solution

The compound interest earned in the second year is interest on the amount after the first year. So second-year interest = \(P \times 1.05 \times 0.05 = 0.0525P\). Given this equals 420, we get \(P = 420/0.0525 = 8000\).

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