Compound Interest — A sum amounts to Rs. 1352 in 2 years at 4% p.a. compound interest (annual). Find the principal.

Introduction / Context:
With annual compounding, the two-year amount factor is (1 + r)^2. Dividing the amount by this factor gives the principal.

Given Data / Assumptions:

• A = Rs. 1352.
• r = 4% = 0.04 per annum (annual compounding).
• t = 2 years.

Concept / Approach:
A = P * (1 + r)^t ⇒ P = A / (1 + r)^2.

Step-by-Step Solution:
(1.04)^2 = 1.0816.P = 1352 / 1.0816 = Rs. 1250.

Verification / Alternative check:
P * 1.0816 = 1250 * 1.0816 = 1352, confirming the result.

Why Other Options Are Wrong:
1300, 1260, 1200, 1240 do not satisfy A = P*(1.04)^2.

Common Pitfalls:
Using SI formula or an incorrect power for t.

Final Answer:
Rs. 1250