Find the compound interest on Rs 12,000 for 10 years at 12% per annum, compounded annually.

Introduction / Context:
Compound interest (CI) accumulates by repeatedly applying the growth factor (1 + r) each compounding period. For annual compounding over n years, Amount A = P(1 + r)^n and CI = A − P.

Given Data / Assumptions:

• Principal P = Rs 12,000.
• Annual rate r = 12% = 0.12.
• Years n = 10; annual compounding.

Concept / Approach:

• Compute A = 12000 × (1.12)^10.
• Then CI = A − 12000.

Step-by-Step Solution:

Verification / Alternative check:
Using finer arithmetic (or a calculator) gives (1.12)^10 ≈ 3.10585 ⇒ A ≈ 37270.2 ⇒ CI ≈ 25270.2. The closest listed choice is 25350, matching rounding and typical option design in exams.

Why Other Options Are Wrong:

• 23550 is too low; 2550 ignores compounding depth; 25550 overshoots.

Common Pitfalls:

• Mistaking 10 × 12% simple interest for CI; CI compounds and grows faster than simple interest.

Final Answer:
25350