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Question

Compound interest of second year is $132$ on a certain some at $10\%$ per annum, find the principal?

• A. $1320$
• B. $1000$
• C. $1200$
• D. None of these

Answer 1

Here is how you can do it :

Answer 2

Let the principal be x.

It is compounded (incremented)annually by 10% or 1.1*amount

at the end of year 1, amount $\therefore$ x*1.1 = 1.1x
The second year's compound interest is 132 (@10% of amount of year 1)
$\therefore$ 10% of 1.1x = 132
0.11x = 132
x = 132/0.11 = 1200

1200 = x = principal amount.