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Question:

Find the compound interest on ₹5,50,000 at 7% per annum for 2 years, compounded annually.

Explanation:

Interest for 1^st year = 7% of 5,50,000 = 38,500

Interest for 2^nd year = 7% more than 38,500 = 41,195

∴ Total interest for 2 years = 41,195 + 38,500 = 79,695

Hence, option (a).