On a certain principal, the compound interest, compounded annually, for the second year at 20% per annum is Rs.1,300. The principal is (consider nearest integral value):

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SSC GD Constable (2022) Official Paper (Held On : 16 Jan 2023 Shift 4)
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  1. Rs.5,600
  2. Rs.5,400
  3. Rs.5,416
  4. Rs.4,416

Answer (Detailed Solution Below)

Option 3 : Rs.5,416
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Given:

The compound interest, compounded annually, for the second year at 20% per annum is Rs.1,300.

Calculation:

Since the compound interest obtained for 2nd year is Rs. 1300

That means it is the simple interest on the principal of 2nd year which is (Main principal + Interest of 1st year)

⇒ 1300 = [Principal of 2nd year] × 20/100

⇒ [Principal of 2nd year] = 6500

We know that,

[Principal of 2nd year] = Main principal + Interest of 1st year

Suppose the main principal is P

⇒ P + [P × 20 × 1] /100 = 6500

⇒ 1.2P = 6500

⇒ P = 5416

∴ Principal amount = Rs. 5416
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