Q. Rs. 7500 has been borrowed at 4% annual compound rate of interest. How much money will have to be returned after two years?

A) Rs. 8112

B) Rs. 9472

C) Rs. 6856

D) Rs. 9281

✔ Correct Answer: Rs. 8112

Exam Insight

The formula for compound interest is A = P(1 + r/100)^t. Substituting P = 7500, r = 4, and t = 2, we get A = 7500(1 + 0.04)^2 = Rs. 8112. Thus, Rs. 8112 must be returned.

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